Large granular lymphocytes (LGLs) could be generated in vitro from tumor-associated cells (TACs) derived from the rhabdomyosarcoma, 76-9, but only after treatment of the tumor bearers with cyclophosphamide (CY). The ability to generate LGLs in vitro was dependent on the presence of high concentrations of recombinant interleukin (rIL)-2 and related to the phase of tumor regression induced by CY. Maximum yields of LGLs were obtained when TACs were derived on days 7 or 8 after CY injection. TACs derived on day 8 and grown in rIL-2 for 5 days were shown to express NK 1.1, B220, IL-2 receptor (IL-2R), Thy-1.2 and a late NK cell differentiation antigen identified by monoclonal antibody, 4H12. They did not express MAC-1, CD3, alpha/beta T cell receptor, CD4 or an early NK cell differentiation antigen identified by monoclonal antibody, 3C2. The expression of NK 1.1, B220, IL-2R, Thy-1.2 and 4H12 by TACs growing in rIL-2 was relatively stable over a 12-day period. IL-2-activated TACs were shown to lyse YAC-1 cells, the wild-type 76-9 tumor cells and two clones of the 76-9 tumor, as well as cells from an independently derived sarcoma, 77-23. Intratumor injection of IL-2-activated TACs or rIL-2 after CY injection induced a significant delay in the recurrence of tumor growth. The data suggest that the increase of IL-2-reactive cells after CY injection and their intratumor disposition may indicate a potential for in situ antitumor effects.