The HRPT2 (hereditary hyperparathyroidism type 2) tumor suppressor gene encodes a ubiquitously expressed 531 amino acid protein termed parafibromin. Inactivation of parafibromin predisposes one to the development of HPT-JT syndrome. To date, the role of parafibromin in tumorigenesis is largely unknown. Here, we report that parafibromin is a nuclear protein that possesses anti-proliferative properties. We show that overexpression of parafibromin inhibits colony formation and cellular proliferation, and induces cell cycle arrest in the G1 phase. Moreover, HPT-JT syndrome-derived mutations in HRPT2 behave in a dominant-negative manner by abolishing the ability of parafibromin to suppress cell proliferation. These findings suggest that parafibromin has a critical role in cell growth, and mutations in HRPT2 can directly inhibit this role.