The promyelocytic leukemia protein PML is organized into nuclear bodies which mediate suppression of oncogenic transformation and of growth. The biochemical functions of PML bodies are unknown, despite their involvement in several human disorders. We demonstrate that eukaryotic initiation factor 4E (eIF4E) directly binds the PML RING, a domain required for association with bodies and for suppression of transformation. Nuclear eIF4E functions in nucleocytoplasmic transport of a subset of transcripts including Cyclin D1. Present studies indicate that some PML requires the evolutionarily older eIF4E protein for association with nuclear bodies. Further more, PML RING modulates eIF4E activity by drastically reducing its affinity for its substrate, 5' m(7)G cap of mRNA. We demonstrate that eIF4E requires cap binding for transport of Cyclin D1 mRNA and subsequent transformation activity. Additionally, PML reduces the affinity of eIF4E for m(7)G mRNA cap, causing a reduction in Cyclin D1 protein levels and consequent transformation inhibition. PML is the first factor shown to modulate nuclear eIF4E function. These findings provide the first biochemical framework for understanding the transformation suppression activity of PML.