Truncated soluble fragments of tumor necrosis factor (TNF) receptors have recently been isolated from human serum and urine. These shed forms of TNF receptors bind TNF-alpha and lymphotoxin and inhibit various effects of TNF in culture. In this study, we evaluated the role of these molecules in the hematopoietic system. TNF-alpha and lymphotoxin inhibited colony forming units granulocyte-macrophage (CFU-GM) and burst forming units-erythroid (BFU-E) in a dose-dependent fashion at concentrations ranging from 1 to 5,000 U/ml and 25 to 250 U/ml, respectively. TNF-alpha exerted a similar dose-dependent inhibitory effect on a CD34 enriched marrow cell population, suggesting that its effect is not mediated through CD34 accessory cells. Its suppressive effect was partially reversed by anti-TNF-alpha neutralizing antibodies, thus proving its specificity. Two shed forms of TNF receptors, TNF binding protein (TNF-bp) and TNF receptor fusion protein (TNFR-fc), had no significant effect on CFU-GM proliferation. Both molecules, however, significantly reversed the inhibitory effect of TNF-alpha (p < 0.015 and p < 0.03, respectively), whereas they had no effect on the lymphotoxin-induced CFU-GM growth inhibition. These results indicate that TNF-bp and TNFR-fc may modulate the inhibitory effects of TNF-alpha in the hematopoietic system.