The immunosuppressant drug rapamycin blocks progression of the cell cycle at the G1 phase in mammalian cells and yeast. Here we show that rapamycin inhibits cap-dependent, but not cap-independent, translation in NIH 3T3 cells. Cap-dependent translation is also specifically reduced in extracts from rapamycin-treated cells, as determined by in vitro translation experiments. This inhibition is causally related to the dephosphorylation and consequent activation of 4E-BP1, a protein recently identified as a repressor of the cap-binding protein, eIF-4E, function. These effects of rapamycin are specific as FK506, a structural analogue of rapamycin, had no effect on either cap-dependent translation or 4E-BP1 phosphorylation. The rapamycin-FK506 binding protein complex is the effector of the inhibition of 4E-BP1 phosphorylation as excess of FK506 over rapamycin reversed the rapamycin-mediated inhibition of 4E-BP1 phosphorylation. Thus, inactivation of eIF-4E is, at least in part, responsible for inhibition of cap-dependent translation in rapamycin-treated cells. Furthermore, these results suggest that 4E-BP1 phosphorylation is mediated by the FRAP/TOR signalling pathway.