Undifferentiated cells and embryos express high levels of endogenous non-telomerase reverse transcriptase (RT) of retroposon/retroviral origin. We previously found that RT inhibitors modulate cell growth and differentiation in several cell lines. We have now sought to establish whether high levels of RT activity are directly linked to cell transformation. To address this possibility, we have employed two different approaches to inhibit RT activity in melanoma and prostate carcinoma cell lines: pharmacological inhibition by two characterized RT inhibitors, nevirapine and efavirenz, and downregulation of expression of RT-encoding LINE-1 elements by RNA interference (RNAi). Both treatments reduced proliferation, induced morphological differentiation and reprogrammed gene expression. These features are reversible upon discontinuation of the anti-RT treatment, suggesting that RT contributes to an epigenetic level of control. Most importantly, inhibition of RT activity in vivo antagonized tumor growth in animal experiments. Moreover, pretreatment with RT inhibitors attenuated the tumorigenic phenotype of prostate carcinoma cells inoculated in nude mice. Based on these data, the endogenous RT can be regarded as an epigenetic regulator of cell differentiation and proliferation and may represent a novel target in cancer therapy.