Previous results suggested a potential role for T-cell protein tyrosine phosphatase (TC-PTP) in cell proliferation. However, no conclusive data has supported such a function in the modulation of this process. In order to clarify this issue, we isolated TC-PTP-/- murine embryonic fibroblasts (MEFs) as well as cell lines to characterize the role of TC-PTP in the control of cell proliferation and cell cycle. Both TC-PTP-/- primary MEFs and cell lines proliferate slower than TC-PTP+/+ cells. We also demonstrated that TC-PTP-/- cells have a slow progression through the G1 phase of the cell cycle. Further characterization of the G1 defect indicates that the kinetics of cyclin D1 induction was delayed and that p27(KIP1) remains at higher levels for an extended period of time. Moreover, cells lacking TC-PTP showed a delayed activation of CDK2. This slow progression through the early G1-phase resulted in decreased phosphorylation of the RB protein and subsequent delay into the S phase transition. In contrast, no further defects were detected in other phases of the cell cycle. Survey of the potential signaling pathways leading to this delayed cyclin D1 expression indicated that NF-kappaB activation was compromised and that IKKbeta activity was also reduced following PDGF stimulation. Reintroduction of wild-type TC-PTP into the TC-PTP-/- cells rescued the defective proliferation, cyclin D1 expression, NF-kappaB activation as well as IkappaB phosphorylation. Together, these results confirm that TC-PTP plays a positive role in the progression of early G1 phase of the cell cycle through the NF-kappaB pathway.