Erythroleukemia induced by the anemia strain of Friend virus occurs in two stages. The first stage results in rapid expansion of pre-leukemic proerythroblasts (FVA cells) dependent on erythropoietin (Epo) for differentiation and survival in vitro. The second stage is characterized by emergence of erythroleukemic clones (MEL cells) which typically bear activation of the ets-oncogene, PU.1/spi.1, and loss of functional p53. We developed a Friend virus-sensitive, p53-deficient mouse model to investigate the biological advantage conferred by p53-loss during tumor progression. Here we report p53 was not required for cell survival or growth arrest during differentiation of FVA cells, nor was p53 required for induction of apoptosis upon Epo withdrawal. However, we detected induction of the p21Cip1 cyclin-dependent kinase inhibitor gene during differentiation, which was markedly enhanced in the presence of p53. p53-dependent expression of p21Cip1 occurred in the absence of an increase in p53 mRNA and protein levels and was specific for p21Cip1, since expression of gadd45, mdm-2, cyclin G and bax were unaffected by p53. In contrast, treatment of FVA cells with DNA damaging agents led to rapid accumulation of p53 protein resulting in transcription of multiple p53-regulated genes, leading to either apoptosis or growth arrest, depending on the agent used. These data demonstrate that p53-dependent activities during differentiation of preleukemic erythroblasts are distinct from those observed in response to genotoxic agents. We propose that enhancement of p53-dependent gene expression during differentiation may represent a tumor suppressor function which is necessary to monitor differentiation of preleukemic cells and which is selected against during tumor progression.