To investigate the inhibitory function of NPCEDRG, a novel tumor suppressor gene, in nasopharyngeal carcinoma (NPC), Tet-on system was introduced. Two plasmids were co-transfected into CNE2 cells, then a transgene CNE2 cell line, which had rapidly inducible and reversible expression of NPCEDRG, was obtained after two selections with G418 or hygromycin. NPCEDRG mRNA expression was detected via RT-PCR assay. Dox was used to induce the expression of NPCEDRG and a cell clone sensitive to Dox was selected. The best-induced concentration was determined with different concentration of Dox induction. Cell morphology observation, growth curves, clone formation rate and cell cycle distribution were detected after NPCEDRG restoration expression with Dox induction. After the restoration of NPCEDRG expression, the degree of CNE2 differentiation was higher than ever, the growth capacity and clone formation potential of CNE2 cells in soft agar were significantly suppressed, and the cell percentage in G0/G1 phase increased, while percentage of cells entering the S and G2 phase decreased. This data indicates that an abnormality of NPCEDRG expression is associated with nasopharyngeal carcinogenesis and that it may play an important role in inducing cell differentiation, controlling cell growth and regulating the cell cycle.