The establishment of a cell culture system for the clonal development of blood cells has made it possible to identify the proteins that regulate the growth and differentiation of different blood cell lineages and to discover the molecular basis of normal and abnormal cell development in blood forming tissues. A model system with myeloid blood cells has shown that (i) normal blood cells require different proteins to induce cell multiplication (growth inducers) and cell differentiation (differentiation inducers), (ii) there is a hierarchy of growth inducers as cells become more restricted in their developmental program, and (iii) a cascade of interactions between proteins determines the correct balance between immature and mature cells in normal blood cell development. Gene cloning has shown that there is a family of different genes for these proteins. Normal protein regulators of blood cell development can control the abnormal growth of certain types of leukemic cells and suppress malignancy by inducing differentiation to mature nondividing cells. Chromosome abnormalities that give rise to malignancy in these leukemic cells can be bypassed and their effects nullified by inducing differentiation, which stops cells from multiplying. These blood cell regulatory proteins are active in culture and in the body, and they can be used clinically to correct defects in blood cell development.