The cloned monocyte/macrophage cell line RAW 264.7 was previously shown to produce thymocyte mitogenic and co-mitogenic activity that eluted from a Sephadex G-75 column not only at approximately 16,000 daltons, the m.w. described for interleukin 1 (IL 1), but also at 30,000 to 40,000 daltons. The studies reported here indicate that the 30,000 to 40,000 dalton molecule has thymic differentiating activity. Thymocytes from A/J mice were fractionated on discontinuous BSA gradients, which yielded populations of cells enriched for immature and mature cells. The cells found at the interface between 35 and 29% BSA (band 1 cells), which are the most immature, were cultured for 48 hr with highly purified IL 1, with the 30,000 to 40,000 dalton form of thymocyte co-mitogenic activity obtained after Sephadex G-75 chromatography and chromatofocusing chromatography, or with media alone. The surface antigens TL-3, H-2Kk, Thy-1.2, Lyt-1, and Lyt-2 were examined by immunofluorescence. It was found that the highly purified 30,000 to 40,000 dalton species of co-mitogenic activity induced a significant increase in the content of surface H-2Kk, a decrease in TL-3, and a very small decrease in Thy-1.2 on the cell surface, whereas IL 1 was not capable of inducing a change in these surface antigens. There was no change in Lyt-1 on the surface of band 1 thymocytes after incubation with either IL 1 or the 30,000 to 40,000 dalton species. The 30,000 to 40,000 dalton species caused a significant decrease in the percentage of cells staining positive for Lyt-2, whereas IL 1 caused a smaller but significant decrease in Lyt-2. These changes in the surface markers TL-3, H-2Kk, and Thy-1.2 are consistent with changes that occur during thymocyte differentiation. It was also observed that the proliferative response to the 30,000 to 40,000 dalton form and IL 1 increased with increasing functional maturity of each band of thymocytes when used in the thymocyte mitogenic assay. However, only the 30,000 to 40,000 dalton form was capable of inducing a proliferative response in the immature band 1 thymocytes in the thymocyte co-mitogenic assay. These results indicate that the RAW 264.7 cells produce a factor that has, in addition to thymocyte co-mitogenic activity, thymocyte differentiation activity, and this factor is distinct from IL 1.