Chronic myeloid leukaemia invariably progresses from a drug-sensitive to a drug-resistant, aggressive acute leukaemia. The mechanisms responsible for this are unknown, although loss of p53 has been reported in approximately 25% of cases. Elevated expression of Bcr-Abl is also associated with disease progression. We have shown that cells expressing high levels of Bcr-Abl also express elevated levels of p53 and the cell cycle inhibitor, p21WAF-1. Despite this, cells continue to cycle and are drug resistant. As p21WAF-1 inhibitory activity is associated with nuclear localization, we investigated its localization in Bcr-Abl-expressing cells, and found that it is predominantly cytoplasmic. We have also shown that it associates physically with the serine/threonine kinase AKT, but this association and the cytosolic location of p21WAF-1 are phosphinositide-3-kinase (PI3K) independent. Cytosolic p21WAF-1 has been reported to have a prosurvival role in other transformed cells. In Bcr-Abl-expressing cells, p21WAF-1 rapidly diminishes as the cells are sensitized to apoptosis, using the inhibitor STI571. It is possible therefore that p21WAF-1 could also have a positive, prosurvival role in these cells. This study suggests that, by retaining p21WAF-1 in a cytosolic location, Bcr-Abl can evade the cell cycle arrest normally induced by nuclear p21WAF-1 and therefore also enable the cells to negate an important feature of a tumour suppressor response.