Differentiation therapy focuses on the development and use of specific agents designed to selectively engage the process of terminal differentiation, leading to the eventual elimination of tumorigenic cells and rebalance of normal cellular homeostasis. Extensive in vitro study of the molecular mechanism involved during drug-induced maturation has allowed the realization and application of a differentiation-based therapy to the clinic. Rationalization of this mode of therapy has included the combined use of differentiation agents with low-dose chemotherapy to lessen adverse cytotoxicity and to enhance the efficacy of differentiation agents, allowing some success in their application to conditions resistant to conventional therapy. This review discusses some biological principles that underlie the concept of a differentiation therapy and compares the in vitro and in vivo effectiveness of the two differentiation agents, in particular retinoic acid (RA) and hexamethylene bisacetamide (HMBA). It also evaluates the prospects for differentiation therapy as an effective strategy in the treatment and management of malignancy.