WT1 is expressed in hematopoietic progenitor cells and in acute leukemia, but its role in normal and malignant hematopoiesis has not been clearly defined. Alternative splicing of the WT1 mRNA yields several protein isoforms with distinct DNA binding and transcriptional regulatory activities. In this study, we investigated the effect of the WT1 isoform lacking two alternatively spliced sequences (WT1 (-/-)) in 32D cl3 cells, a murine myeloid progenitor cell line. The expression of WT1 (-/-) accelerated the granulocyte-colony stimulating factor (G-CSF)-mediated differentiation of these cells, as judged by morphology and by the expression of differentiation-associated genes and cell surface antigens. WT1 (-/-) inhibited G1/S progression in G-CSF but not in interleukin-3, potentially accounting for its ability to accelerate differentiation. It is likely that dominant-negative mutants previously reported in leukemia patients participate in leukemogenesis by inhibiting this function of the wild-type protein.