p204, an interferon-inducible p200 family protein, inhibits rRNA synthesis in fibroblasts by blocking the binding of the upstream binding factor transcription factor to DNA. Here we report that among 10 adult mouse tissues tested, the level of p204 was highest in heart and skeletal muscles. In cultured C2C12 skeletal muscle myoblasts, p204 was nucleoplasmic and its level was low. During myoblast fusion this level strongly increased, p204 became phosphorylated, and the bulk of p204 appeared in the cytoplasm of the myotubes. Leptomycin B, an inhibitor of nuclear export that blocked myoblast fusion, inhibited the nuclear export signal-dependent translocation of p204 to the cytoplasm. The increase in the p204 level during myoblast fusion was a consequence of MyoD transcription factor binding to several MyoD-specific sequences in the gene encoding p204, followed by transcription. Overexpression of p204 (in C2C12 myoblasts carrying an inducible p204 expression plasmid) accelerated the fusion of myoblasts to myotubes in differentiation medium and induced the fusion even in growth medium. The level of p204 in mouse heart muscle strongly increased during differentiation; it was barely detectable in 10. 5-day-old embryos, reached the peak level in 16.5-day-old embryos, and remained high thereafter. p204 is the second p200 family protein (after p202a) found to be involved in muscle differentiation. (p202a was formerly designated p202. The new designation is due to the identification of a highly similar protein-p202b [H. Wang, G. Chatterjee, J. J. Meyer, C. J. Liu, N. A. Manjunath, P. Bray-Ward, and P. Lengyel, Genomics 60:281-294, 1999].) These results reveal that p204 and p202a function in both muscle differentiation and interferon action.