The cyclin-dependent kinase inhibitor p16 is a candidate tumour-suppressor protein that maps to a genomic locus strongly associated with familial melanoma and other tumour types. Screening of primary tumours and linkage analysis of familial melanoma pedigrees have identified many potential mutations in p16, but the functional significance of these sequence variants has remained unclear. We report here that p16 can act as a potent and specific inhibitor of progression through the G1 phase of the cell cycle, and we demonstrate that several tumour-derived alleles of p16 encode functionally compromised proteins. The ability of p16 to arrest cell-cycle progression generally correlates with inhibition of cyclin D1/Cdk4 kinase activity in vitro, with two exceptions among the alleles tested. In vivo, the presence of functional retinoblastoma protein appears to be necessary but may not be sufficient to confer full sensitivity to p16-mediated growth arrest. Our results provide support for the notion that p16 is an important cell-cycle regulator whose inactivation contributes to the outgrowth of human tumours.