Adeno-associated virus Rep78 protein has antiproliferative effects on cells. It inhibits cell cycle progression, and, in particular, Rep78 induces a complete arrest within S phase, a response rarely seen after cell DNA damage. We examined how Rep78 achieves such an efficient S phase block. Rep78 inhibits Cdc25A activity by a novel means in which binding between the two proteins stabilizes Cdc25A, thus increasing its abundance, while at the same time preventing access to its substrates cyclin-dependent kinase (Cdk) 2 and Cdk1. This effect alone does not induce a complete S phase block. In addition, Rep78, as well as Rep68, produces nicks in the cellular chromatin, inducing a DNA damage response mediated by ataxia telangiectasia mutated (ATM) leading to G(1) and G(2) blocks. Mutational analysis shows that the zinc finger domain and nuclease activity of Rep78 are both required for the S phase block. The results suggest that a true S phase block cannot be achieved through a single pathway, and that adeno-associated virus Rep78 protein arrests cells within S phase by interfering with two pathways that would normally lead to an S phase slow-down.