E2F transcription factors can activate or actively repress transcription of their target genes. The role of active repression during normal development has not been analyzed in detail. dE2F1(su89) is a novel allele of dE2F1 that disrupts dE2F1's association with RBF [the Drosophila retinoblastoma protein (Rb) homolog] but retains its transcription activation function. Interestingly, the dE2F1(su89) mutant, which has E2F activation by dE2F1(su89) and active repression by dE2F2, is viable and fertile with no gross developmental defects. In contrast, complete removal of active repression in de2f2;dE2F1(su89) mutants results in severe developmental defects in tissues with extensive endocycles but not in tissues derived from mitotic cycles. We show that the endoreplication defect resulted from a failure to downregulate the level of cyclin E during the gap phase of the endocycling cells. Importantly, reducing the gene dosage of cyclin E partially suppressed all the phenotypes associated with the endoreplication defect. These observations point to an important role for E2F-Rb complexes in the downregulation of cyclin E during the gap phase of endocycling cells in Drosophila development.