Highly purified natural interferon-gamma (IFN-gamma) induced differentiation having characteristics that are associated with the human promyelocytic leukemia cell line, HL-60. Monoclonal antibody to INF-gamma neutralized its activity. However, the natural IFN-gamma had almost no inducing activity in ML-1, a human myeloblastic leukemia cell line. Similar results were obtained using recombinant IFN-gamma. Mitogen stimulated human leukocyte conditioned medium (LCM) induced differentiation of both ML-1 and HL-60 cells. After treatment of LCM with monoclonal antibody to IFN-gamma, LCM activity was reduced more than 50% in ML-1 cells, and 80% in HL-60 cells. Even if IFN-gamma was eliminated from LCM by affinity chromatography, the LCM induced differentiation of ML-1 and HL-60 cells, but IFN-gamma markedly enhanced the ML-1 cell differentiation induced by IFN-gamma free LCM. The results suggest that leukocytes produce differentiation inducing factor(s) other than IFN-gamma, and that IFN-gamma is both an inducer and an enhancer of induction of human myelogenous leukemia cells.