In response to DNA damage, the cell cycle checkpoint is an important biological event in maintaining genomic fidelity. Gadd45, a p53-regulated and DNA damage inducible protein, has recently been demonstrated to play a role in the G2-M checkpoint in response to DNA damage. In the current study, we further investigated the biochemical mechanism(s) involved in the GADD45-activated cell cycle G2-M arrest. Using the tetracycline-controlled system (tet-off), we established GADD45-inducible lines in HCT116 (wild-type p53) and Hela (inactivated p53 status) cells. Following inducible expression of the Gadd45 protein, cell growth was strongly suppressed in both HCT116 and Hela cells. Interestingly, HCT116 cells revealed a significant G2-M arrest but Hela cells failed to arrest at the G2-M phases, indicating that the GADD45-activated G2-M arrest requires normal p53 function. The GADD45-induced G2-M arrest was observed independent of p38 kinase activity. Importantly, induction of Gadd45 protein resulted in a reduction of nuclear cyclin B1 protein, whose nuclear localization is critical for the completion of G2-M transition. The reduced nuclear cyclin B1 levels correlated with inhibition of Cdc2/cyclin B1 kinase activity. Additionally, overexpression of cyclin B1 substantially abrogated the GADD45-induced cell growth suppression. Therefore, GADD45 inhibition of Cdc2 kinase activity through alteration of cyclin B1 subcellular localization may be an essential step in the GADD45-induced cell cycle G2-M arrest and growth suppression.