Mammalian DREAM is a conserved protein complex that functions in cellular quiescence. DREAM contains an E2F, a retinoblastoma (RB)-family protein, and the MuvB core (LIN9, LIN37, LIN52, LIN54, and RBBP4). In mammals, MuvB can alternatively bind to BMYB to form a complex that promotes mitotic gene expression. Because BMYB-MuvB is essential for proliferation, loss-of-function approaches to study MuvB have generated limited insight into DREAM function. Here, we report a gene-targeted mouse model that is uniquely deficient for DREAM complex assembly. We have targeted p107 (Rbl1) to prevent MuvB binding and combined it with deficiency for p130 (Rbl2). Our data demonstrate that cells from these mice preferentially assemble BMYB-MuvB complexes and fail to repress transcription. DREAM-deficient mice show defects in endochondral bone formation and die shortly after birth. Micro-computed tomography and histology demonstrate that in the absence of DREAM, chondrocytes fail to arrest proliferation. Since DREAM requires DYRK1A (dual-specificity tyrosine phosphorylation-regulated protein kinase 1A) phosphorylation of LIN52 for assembly, we utilized an embryonic bone culture system and pharmacologic inhibition of (DYRK) kinase to demonstrate a similar defect in endochondral bone growth. This reveals that assembly of mammalian DREAM is required to induce cell cycle exit in chondrocytes. © 2014, American Society for Microbiology.