We previously described that V3 loop derived from the HTLV-III BH10 clone V3-BH10 markedly suppressed IL-2-driven T cell proliferation and produced G1 arrest of the cells. Here, we tested the effect of V3-BH10 on the molecules that are involved in transition from the G1 to S phase of the cell cycle. The effect of V3-BH10 on the IL-2-induced expression of G1 cyclins, Cdk inhibitors, and phosphorylation of retinoblastoma protein (pRb) was tested by immunoblotting, using the IL-2-dependent CD4-positive cell line Kit 225. Furthermore, IL-2-dependent kinase activity of the cyclin E-Cdk2 complex was investigated with histone H1 as a substrate. V3-BH10 reduced the IL-2-dependent expression of cyclin E, but not that of cyclin D and Cdk inhibitors such as p21 and p27. As the result of reduction of cyclin E, histone H1 kinase activity of the cyclin E-Cdk2 complex was markedly reduced even in the presence of rIL-2, followed by incomplete phosphorylation of pRb. The reduction in hyperphosphorylation of pRb by V3-BH10 led to G1 arrest of the cell cycle. Thus, V3-BH10 induced G1 arrest in IL-2-dependent cell cycle progression by reducing cyclin E expression, which may be one of the mechanisms underlying the dysfunction of T cells in HIV-1-infected people.