Terminal differentiation and cellular senescence display common properties including irreversible growth arrest. To define the molecular and ultimately the biochemical basis of the complex physiological changes associated with terminal differentiation and senescence, an overlapping-pathway screen was used to identify genes displaying coordinated expression as a consequence of both processes. This approach involved screening of a subtracted cDNA library prepared from human melanoma cells induced to terminally differentiate by treatment with fibroblast IFN and mezerein with mRNA derived from senescent human progeria cells. This strategy identified old-35, which encodes an evolutionary conserved gene, human polynucleotide phosphorylase (hPNPase(old-35)), that is regulated predominantly by type I IFNs. The hPNPase(OLD-35) protein localizes in the cytoplasm of human cells and induces RNA degradation in vitro, as does its purified bacterial protein homologue. Ectopic expression of hPNPase(old-35) in human melanoma cells reduces colony formation, confirming inhibitory activity of this RNA-degradation enzyme. Identification of hPNPase(old-35), an IFN-inducible 3'-5' RNA exonuclease, provides additional support for a relationship between IFN action and RNA processing and suggests an important role for this gene in growth control associated with terminal differentiation and cellular senescence.