Genes encoding growth-inhibitory proteins are postulated to be candidate tumor suppressors. The identification of such proteins may benefit the early diagnosis and therapy of tumors. Here we report the cloning and functional characterization of a novel human bone marrow stromal cell (BMSC)-derived growth inhibitor (BDGI) by large scale random sequencing of a human BMSC cDNA library. Human BDGI cDNA encodes a 477-amino acid residue protein that shares high homology with rat and mouse pregnancy-induced growth inhibitors. The C-terminal of BDGI is identical to a novel human pregnancy-induced growth inhibitor, OKL38. BDGI is also closely related to many other eukaryotic proteins, which together form a novel and highly conserved family of BDGI-like proteins. BDGI overexpression inhibits the proliferation, decreases anchorage-dependent growth, and reduces migration of MCF-7 human breast cancer cells, whereas down-regulation of BDGI expression promotes the proliferation of MCF-7 and HeLa cervix epitheloid carcinoma cells. Interestingly, the inhibitory effect of BDGI on MCF-7 cells is more potent than that of OKL38. We demonstrate that BDGI induces cell cycle arrest in S phase and subsequent apoptosis of MCF-7 cells, which is likely to account for the antiproliferative effects of BDGI. This process may involve up-regulation of p27Kip1 and down-regulation of cyclin A, Bcl-2, and Bcl-xL. The inhibitory effect of BDGI on cell proliferation and the induction of apoptosis were also observed in A549 lung cancer cells but not HeLa cells. These results indicate that BDGI might be a growth inhibitor for human tumor cells, especially breast cancer cells, possibly contributing to the development of new therapeutic strategies for breast cancer.