The small cytokine-inducible SH2 domain-containing protein (CIS) has been implicated in the negative regulation of signaling through cytokine receptors. CIS reduces growth of erythropoietin receptor (EpoR)-dependent cell lines, but its role in proliferation, differentiation, and survival of erythroid progenitor cells has not been resolved. To dissect the function of CIS in cell lines and erythroid progenitor cells, we generated green fluorescent protein (GFP)-tagged versions of wild type CIS, a mutant harboring an inactivated SH2 domain (CIS R107K), and a mutant with a deletion of the SOCS Box (CISDeltaBox). Retroviral expression of the GFP fusion proteins in BaF3-EpoR cells revealed that both Tyr-401 in the EpoR and an intact SH2 domain within CIS are prerequisites for receptor recruitment. As a consequence, both are essential for the growth inhibitory effect of CIS, whereas the CIS SOCS box is dispensable. Accordingly, the retroviral expression of GFP-CIS but not GFP-CIS R107K impaired proliferation of erythroid progenitor cells in colony assays. Erythroid differentiation was unaffected by either protein. Interestingly, apoptosis of erythroid progenitor cells was increased upon GFP-CIS expression and this required the presence both of an intact SH2 domain and the SOCS box. Thus, CIS negatively regulates signaling at two levels, apoptosis and proliferation, and thereby sets a threshold for signal transduction.