To develop a new approach to the treatment of primitive neuroectodermal tumors we evaluated the effect of the HMG-CoA reductase inhibitor lovastatin on the Ewing's sarcoma cell line CHP-100. Lovastatin induced neural morphology and markers including neuron-specific enolase and neurofilament protein. The acquisition of neural morphology required new mRNA synthesis, and cDNA microarray analysis confirmed that lovastatin altered the program of gene expression. After morphologic differentiation the cells underwent rapidly progressive apoptosis. In normal development of neuronal progenitors, differentiation signals trigger p21WAF1 accumulation, RB hypophosphorylation, enhanced RB-E2F-1 association, and G1 arrest, and these events have been shown to protect from apoptosis. In contrast, in the Ewing's sarcoma cells lovastatin triggered differentiation without causing cell cycle arrest: p21WAF1 was not induced, RB remained hyperphosphorylated, and RB protein expression and RB-E2F-1 association were markedly downregulated, suggesting that loss of an RB-regulated G1 checkpoint promoted apoptosis. Consistent with this hypothesis, adenoviral p21WAF1 decreased DNA synthesis and partially protected from lovastatin-induced cytotoxicity. The data demonstrate a new model for examining the genetic regulation of cell fate in a neural progenitor tumor and suggest a new approach to the treatment of this neoplasm.