Glycogen synthase kinase 3beta (GSK-3beta) represses cell cycle progression by directly phosphorylating cyclin D1 and indirectly regulating cyclin D1 transcription by inhibiting Wnt signaling. Recently, we reported that the Epm2a-encoded laforin is a GSK-3beta phosphatase and a tumor suppressor. The cellular mechanism for its tumor suppression remains unknown. Using ex vivo thymocytes and primary embryonic fibroblasts from Epm2a(-/-) mice, we show here a general function of laforin in the cell cycle regulation and repression of cyclin D1 expression. Moreover, targeted mutation of Epm2a increased the phosphorylation of Ser9 on GSK-3beta while having no effect on the phosphorylation of Ser21 on GSK-3alpha. In the GSK-3beta(+/+) but not the GSK-3beta(-/-) cells, Epm2a small interfering RNA significantly enhanced cell growth. Consistent with an increased level of cyclin D1, the phosphorylation of retinoblastoma protein (Rb) and the levels of Rb-E2F-regulated genes cyclin A, cyclin E, MCM3, and PCNA are also elevated. Inhibitors of GSK-3beta selectively increased the cell growth of Epm2a(+/+) but not of Epm2a(-/-) cells. Taken together, our data demonstrate that laforin is a selective phosphatase for GSK-3beta and regulates cell cycle progression by GSK-3beta-dependent mechanisms. These data provide a cellular basis for the tumor suppression activity of laforin.