In normal cells the protein kinase PKR effects apoptosis in response to various extra and intracellular cues and can also function to suppress the neoplastic phenotype. Because most neoplastic cells are resistant to certain apoptotic cues, we reasoned that an early molecular event in carcinogenesis or leukemogenesis might be the inactivation of PKR by expression or activation of intracellular PKR inhibitors. Seeking novel PKR-modulating proteins we report here that nucleophosmin (NPM), a protein frequently overexpressed in a variety of human malignancies, binds to PKR, and inhibits its activation. Co-immunoprecipitation and in vitro binding experiments showed that NPM associated with PKR. Kinase assays demonstrated that recombinant NPM inhibited PKR activation in a dose-dependent manner. In addition, purified recombinant NPM was phosphorylated by activated PKR. Most importantly, overexpression of NPM suppressed PKR activity, enhanced protein synthesis, and inhibited apoptosis. Lymphoblasts from patients with Fanconi anemia (FA) expressed low levels of NPM, which correlated with high ground-state activation of PKR and cellular hypersensitivity to apoptotic cues, but enforced expression of NPM in these mutant cells reduced aberrant apoptotic responses. Inhibition of PKR by NPM may be one mechanism by which neoplastic clones evolve in sporadic malignancies and in neoplastic cells arising in the context of the cancer predisposition syndrome, Fanconi anemia.