Using a subtractive cloning scheme on cDNA prepared from primary pro-B and pre-B cells, we identified several genes whose products regulate apoptosis. We further characterized one of these genes, encoding protein kinase Ceta (PKCeta). PKCeta transcripts were readily detected in pro-B cells but were absent in pre-B cells. Although both a full-length and a truncated form of PKCeta were detectable in bone marrow pro-B cells, transition to the pre-B-cell stage was associated with increased relative levels of truncated PKCeta. We found that PKCeta is proteolyzed in apoptotic lymphocytes, generating a kinase-active fragment identical to the truncated form which is capable of inducing apoptosis when expressed in a pro-B cell line. Caspase-3 can generate an identical PKCeta cleavage product in vitro, and caspase inhibitors prevent the generation of this product during apoptosis in transfected cell lines. Inducible overexpression of either the full-length or truncated form of PKCeta results in cell cycle arrest at the G(1)/S transition. These results suggest that the expression and proteolytic activation of PKCeta play an important role in the regulation of cell division and cell death during early B-cell development.