Abstract Erythropoiesis is primarily controlled by erythropoietin (Epo), which stimulates proliferation, differentiation and survival of erythroid precursors. We have previously shown that the tyrosine kinase Lyn is critical for transducing differentiation signals emanating from the activated Epo receptor. A yeast two-hybrid screen for downstream effectors of Lyn identified a novel protein, Liar (Lyn interacting ankyrin repeat), which forms a multi-protein complex with Lyn and HS1 in erythroid cells. Interestingly, the ankyrin repeats of Liar define a novel SH3 binding region for Lyn and HS1. Liar also contains functional nuclear localisation and nuclear export sequences, and shuttles rapidly between the nucleus and cytoplasm. Ectopic expression of Liar inhibited the differentiation of normal erythroid progenitors, as well as immortalised erythroid cells. Significantly, Liar affected Epo-activated signaling molecules including Erk2, STAT5 and Lyn. These results show that Liar is a novel Lyn-interacting molecule that plays an important role in regulating intracellular signaling events associated with erythroid terminal differentiation.