The retinoblastoma Rb protein is an important factor controlling the cell cycle. Yet, mammalian cells carrying Rb deletions are still able to arrest under growth-limiting conditions. The Rb-related proteins p107 and p130, which are components of the DREAM complex, had been suggested to be responsible for a continued ability to arrest by inhibiting E2f activity and by recruiting chromatin-modifying enzymes. Here, we show that p130 and p107 are not sufficient for DREAM-dependent repression. We identify the MuvB protein Lin37 as an essential factor for DREAM function. Cells not expressing Lin37 proliferate normally, but DREAM completely loses its ability to repress genes in G₀/G₁ while all remaining subunits, including p130/p107, still bind to target gene promoters. Furthermore, cells lacking both Rb and Lin37 are incapable of exiting the cell cycle. Thus, Lin37 is an essential component of DREAM that cooperates with Rb to induce quiescence.