Previously, we found that in t(X;1)(p11;q21)-positive renal cell carcinomas the bHLH-LZ transcription factor TFE3 is fused to a novel protein designated PRCC. In addition, we found that the PRCCTFE3 fusion protein, which has retained all known functional domains of TFE3, acts as a more potent transcriptional activator than wild type TFE3. We also found that PRCCTFE3 expression confers in vitro and in vivo transformation onto various cell types, including those of the kidney. Here we show that de novo expression of the PRCCTFE3 fusion protein provokes cell cycle delay. This delay, which is mediated by induction of the cyclin-dependent kinase inhibitor p21((WAF1/CIP1)), affects both the G1/S and the G2/M phases of the cell cycle and prevents the cells from undergoing polyploidization. We also show that the PRCCTFE3 fusion protein binds directly to the p21((WAF1/CIP1)) promoter and that the PRCCTFE3-induced up-regulation of p21((WAF1/CIP1)) leads to activation of the pRB pathway. Finally, we show that in t(X;1)(p11;q21)-positive renal tumor cells several processes that link PRCCTFE3 expression to p21((WAF1/CIP1))-mediated cell cycle delay are abrogated. Our data suggest a scenario in which, during the course of renal cell carcinoma development, an initial PRCCTFE3-induced cell cycle delay must be numbed, thus permitting continued proliferation and progression towards full-blown malignancy.