The signalling pathways that arrest the cell cycle and trigger cell death are only partially known. Dimerization of CD38, a 45-kD transmembrane type II glycoprotein highly expressed in immature B cells, inhibits cell growth and causes apoptosis in normal and leukemic B-cell progenitors, but the molecular mechanisms underlying these cellular responses are unknown. In the present study, we found that CD38 ligation in the immature B-cell lines 380, REH, and RS4;11 caused rapid tyrosine phosphorylation of the protein product of the proto- oncogene c-cbl. Dimerization of CD38 was accompanied by the association of cbl with the p85 subunit of phosphatidylinositol 3-kinase (Pl 3-K), resulting in markedly increased Pl 3-K activity in antiphosphotyrosine and anti-cbl immunoprecipitates. Wortmannin and LY294002, two potent inhibitors of Pl 3-K, rescued immature B cells from CD38-mediated growth suppression. This effect was observed not only in model B-cell lines, but also in cultures of leukemic lymphoblasts from patients, and in normal bone marrow B-cell progenitors as well. Concentrations of inhibitors that reversed cellular responses to CD38 significantly decreased Pl 3-K activity. By contrast, rapamycin, a p70 S6-kinase inhibitor, did not rescue immature B cells from CD38-mediated suppression. These results suggest that Pl 3-K activity is essential for CD38-mediated inhibition of lymphopoiesis and that cbl and Pl 3-K are regulatory molecules whose activation can result in suppression of cell proliferation and apoptosis in immature lymphoid cells.