Type I interferons (IFNs) are cytokines with diverse biological properties, including antiviral, growth inhibitory, and immunomodulatory effects. Although several signaling pathways are activated during engagement of the type I IFN receptor and participate in the induction of IFN responses, the mechanisms of generation of specific signals for distinct biological effects remain to be elucidated. We provide evidence that a novel member of the protein kinase C (PKC) family of proteins is rapidly phosphorylated and activated during engagement of the type I IFN receptor. In contrast to other members of the PKC family that are also regulated by IFN receptors, PKCeta does not regulate IFN-inducible transcription of interferon-stimulated genes or generation of antiviral responses. However, its function promotes cell cycle arrest and is essential for the generation of the suppressive effects of IFNalpha on normal and leukemic human myeloid (colony-forming unit-granulocyte macrophage) bone marrow progenitors. Altogether, our studies establish PKCeta as a unique element in IFN signaling that plays a key and essential role in the generation of the regulatory effects of type I IFNs on normal and leukemic hematopoiesis.