Interferon-beta (IFN-beta) induces aberrant cell cycle progression as well as cytotoxicity and apoptosis. However, the relationship between the cell cycle alteration and the induction of cytotoxicity/apoptosis is unknown. Here, we report the first demonstration that the IFN-beta-induced direct cytotoxic/apoptotic effect can be separated functionally from its cell cycle effect. By using lentiviral transduction, we generated human tumor cells that stably expressed IFN-beta and were resistant to its direct cytotoxic/apoptotic effect. Despite this resistance to apoptosis, these cells showed significant S phase accumulation as measured by both FACS analyses and bromodeoxyuridine (BrdU) incorporation. Although the cells proliferated in the presence of high levels of IFN-beta, they had lost their tumorigenicity in mice. A portion of these cells was observed to undergo a tumor cell-specific senescence. Therefore, our study revealed a direct tumor-suppressor function of IFN-beta. This tumor-suppressor function was independent of IFN-beta-induced direct cytotoxic effect. It was also distinct from the IFN-beta-induced immunologic antitumor response, an indirect effect of IFN-beta. We conclude that the antiproliferative effect on human tumor cells is the collective activities of the direct cytotoxic/apoptotic effect, the cell cycle alteration that occurs as predominantly S phase accumulation, and less frequently other cell cycle effects, such as G(1) arrest, and the promotion of tumor cells into a senescent-like state.