In multicellular organisms, developmental programmes must integrate with central cell cycle regulation to co-ordinate developmental decisions with cell proliferation. Hyperplasia caused by deregulated proliferation without significant change to other aspects of developmental behaviour is a probable step towards full oncogenesis in many malignancies. CDC25 phosphatase promotes progression through the eukaryotic cell cycle by dephosphorylation of cyclin-dependent kinase and, in humans, different cdc25 family members have been implicated as potential oncogenes. Demonstrating the direct oncogenic potential of a cdc25 gene, we identify a gain-of-function mutant allele of the Caenorhabditis elegans gene cdc-25.1 that causes a deregulated proliferation of intestinal cells resulting in hyperplasia, while other aspects of intestinal cell function are retained. Using RNA-mediated interference, we demonstrate modulation of the oncogenic behaviour of this mutant, and show that a reduction of the wild-type cdc-25.1 activity can cause a failure of proliferation of intestinal and other cell types. That gain and loss of CDC-25.1 activity has opposite effects on cellular proliferation indicates its critical role in controlling C.elegans cell number.