GADD34 is a member of a growth arrest and DNA damage (GADD)-inducible gene family. Here, we established a novel Chinese hamster ovary (CHO)-K1-derived cell line, CHO-K1-G34M, which carries a nonsense mutation (termed the Q525X mutation) in the GADD34 gene. The Q525X mutant protein lacks the C-terminal 66 amino acids required for GADD34 to bind to and activate protein phosphatase 1 (PP1). We investigated the effects of GADD34 with or without the Q525X mutation on the phosphorylation status of PP1 target proteins, including the subunit of eukaryotic initiation factor 2 (eIF2) and glycogen synthase kinase 3 (GSK3). CHO-K1-G34M cells had higher levels of eIF2 phosphorylation compared to the control CHO-K1-normal cells both in the presence and absence of endoplasmic reticulum stress. Overexpression of the wild-type GADD34 protein in CHO-K1-normal cells largely reduced eIF2 phosphorylation, while overexpression of the Q525X mutant did not produce similar reductions. Meanwhile, neither wild type nor Q525X mutation of GADD34 affected the GSK3 phosphorylation status. GADD34 also did not affect the canonical Wnt signaling pathway downstream of GSK3. Cell proliferation rates were higher, while expression levels of the cyclin-dependent kinase inhibitor p21 were lower in CHO-K1-G34M cells compared to the CHO-K1-normal cells. The GADD34 Q525X mutant had a reduced ability to inhibit cell proliferation and enhance p21 expression of the CHO-K1-normal cells compared to the wild-type GADD34 protein. These results suggest that the GADD34 protein C-terminal plays important roles in regulating not only eIF2 dephosphorylation but also cell proliferation in CHO-K1 cells.