Several flavonoids have been reported to be proteasome inhibitors, but whether prenylated flavonoids are able to inhibit proteasome function remains unknown. We report for the first time that Sanggenon C, a natural prenylated flavonoid, inhibits tumor cellular proteasomal activity and cell viability. We found that (1) Sanggenon C inhibited tumor cell viability and induced cell cycle arrest at G0/G1 phase; (2) Sanggenon C inhibited the chymotrypsin-like activity of purified human 20S proteasome and 26S proteasome in H22 cell lysate, and Sanggenon C was able to dose-dependently accumulate ubiquitinated proteins and proteasome substrate protein p27; (3) Sanggenon C-induced proteasome inhibition occurred prior to cell death in murine H22 and P388 cell lines; (4) Sanggenon C induced death of human K562 cancer cells and primary cells isolated from leukemic patients. We conclude that Sanggenon C inhibits tumor cell viability via induction of cell cycle arrest and cell death, which is associated with its ability to inhibit the proteasome function and that proteasome inhibition by Sanggenon C at least partially contributes to the observed tumor cell growth-inhibitory activity.