Acute myeloid leukemia (AML) is characterized by increased proliferation and reduced differentiation of myeloid lineage cells. AML is frequently associated with mutations or chromosomal rearrangements involving transcription factors. PU.1 (encoded by Sfpi1) is an ETS family transcription factor that is required for myeloid differentiation. Reduced PU.1 levels, caused by either mutation or repression, are associated with human AML and are sufficient to cause AML in mice. The objective of this study was to determine if reduced PU.1 expression induces deregulation of the cell cycle in the myeloid lineage. Our results showed that immature myeloid cells expressing reduced PU.1 levels (Sfpi1(BN/BN) myeloid cells) proliferated indefinitely in cell culture and expanded in vivo. Transplantation of Sfpi1(BN/BN) cells induced AML in recipient mice. Cultured Sfpi1(BN/BN) cells expressed elevated mRNA transcript and protein levels of E2F1, an important regulator of cell cycle entry. Restoration of PU.1 expression in Sfpi1(BN/BN) myeloid cells blocked proliferation, induced differentiation, and reduced E2F1 expression. Taken together, these data show that PU.1 controls cell cycle exit in the myeloid lineage associated with down-regulation of E2F1 expression.