The murine p204 protein level is highest in heart and skeletal muscle. During the fusion of cultured myoblasts to myotubes, the p204 level increases due to transcription dependent on the muscle-specific MyoD protein, and p204 is phosphorylated and translocated from the nucleus to the cytoplasm. p204 overexpression accelerates myoblast fusion in differentiation medium and triggers this process even in growth medium. Here we report that p204 is required for the differentiation of C2C12 myoblasts. We propose that it enables the differentiation, at least in part, by overcoming the inhibition of the activities of the MyoD and E47 proteins by the Id proteins: Id1, Id2, and Id3. These are known to inhibit skeletal muscle differentiation by binding and blocking the activity of MyoD, E12/E47, and other myogenic basic helix-loop-helix (bHLH) proteins. Our hypothesis is based on the following findings. (i) A decrease in the p204 level in C2C12 myoblasts by antisense RNA (a) increased the level of the Id2; (b) inhibited the MyoD-, E12/E47-, and other bHLH protein-dependent accumulation of the muscle-specific myosin heavy-chain protein; and (c) inhibited the fusion of myoblasts to myotubes in differentiation medium. (ii) p204 bound to the Id proteins in vitro and in vivo. (iii) In the binding of p204 to Id2, the b segment of p204 and the HLH segment of Id2 were involved. (iv) Addition of p204 overcame the inhibition by the Id proteins of the binding of MyoD and E47 to DNA in vitro. (v) Overexpression of p204 in myoblasts (a) decreased the level of the Id proteins, even in a culture in growth medium, and (b) overcame the inhibition by the Id proteins of MyoD- and E47 dependent transcription and also overcame the inhibition by Id2 of the fusion of myoblasts to myotubes.