Protein N(alpha)-terminal acetylation is a conserved and widespread protein modification in eukaryotes. Several studies have linked it to normal cell function and cancer development, but nevertheless, little is known about its biological function. In yeast, protein N(alpha)-terminal acetylation is performed by the N-acetyltransferase complexes NatA, NatB and NatC. In humans, only the NatA complex has been identified and characterized. In the present study we present the components of hNatB (human NatB complex). It consists of the Nat3p homologue hNAT3 (human N-acetyltransferase 3) and the Mdm20p homologue hMDM20 (human mitochondrial distribution and morphology 20). They form a stable complex and in vitro display sequence-specific N(alpha)-acetyltransferase activity on a peptide with the N-terminus Met-Asp-. hNAT3 and hMDM20 co-sediment with ribosomal pellets, thus supporting a model where hNatB acts co-translationally on nascent polypeptides. Specific knockdown of hNAT3 and hMDM20 disrupts normal cell-cycle progression, and induces growth inhibition in HeLa cells and the thyroid cancer cell line CAL-62. hNAT3 knockdown results in an increase in G(0)/G(1)-phase cells, whereas hMDM20 knockdown decreased the fraction of cells in G(0)/G(1)-phase and increased the fraction of cells in the sub-G(0)/G(1)-phase. In summary, we show for the first time a vertebrate NatB protein N(alpha)-acetyltransferase complex essential for normal cell proliferation.