Bruton's tyrosine kinase (Btk) is a cytoplasmic signaling molecule that is crucial for precursor (pre-B) cell differentiation in humans. In this study, we show that during the transition of large cycling to small resting pre-B cells in the mouse, Btk-deficient cells failed to efficiently modulate the expression of CD43, surrogate L chain, CD2, and CD25. In an analysis of the kinetics of pre-B cell differentiation in vivo, Btk-deficient cells manifested a specific developmental delay within the small pre-B cell compartment of about 3 h, when compared with wild-type cells. Likewise, in in vitro bone marrow cultures, Btk-deficient large cycling pre-B cells showed increased IL-7 mediated expansion and reduced developmental progression into noncycling CD2(+)CD25(+) surrogate L chain-negative small pre-B cells and subsequently into Ig-positive B cells. Furthermore, the absence of Btk resulted in increased proliferative responses to IL-7 in recombination-activating gene-1-deficient pro-B cells. These findings identify a novel role for Btk in the regulation of the differentiation stage-specific modulation of IL-7 responsiveness in pro-B and pre-B cells. Moreover, our results show that Btk is critical for an efficient transit through the small pre-B cell compartment, thereby regulating cell surface phenotype changes during the developmental progression of cytoplasmic mu H chain expressing pre-B cells into immature IgM(+) B cells.