Considerable progress has been made toward elucidating the pathway of induction of terminal differentiation of transformed cells by hybrid polar compounds such as hexamethylene bisacetamide (HMBA). HMBA alters factors controlling G1-to-S phase transition, leading to G1 arrest and inhibition of DNA synthesis. Among the inducer-mediated changes, suppression of cyclin-dependent kinase cdk4, which may be required for phosphorylation of the retinoblastoma protein pRB and perhaps p107, is critical in the pathway of terminal differentiation. HMBA induces an increase in the level of p21 which inhibits cyclin-dependent kinase activity and, in turn, may cause cells to arrest in G1. p107 complexes with transcription factor E2F, which may alter E2F-dependent gene transcription. the relationship of the inducer-mediated changes in cyclins, cdks, cyclin-cdk inhibitors and transcription factors to the expression of differentiation-specific genes has not yet been established. The hybrid polar compounds are potent inducers of differentiation of a wide variety of transformed cells. HMBA has been shown to induce differentiation of neoplastic cells in patients. A second generation of hybrid polar compounds have been synthesized which are up to 1000 fold more potent than HMBA on a molar basis as inducers of murine erythroleukemia (MEL) cells and other transformed cells in vitro. The potential of these compounds as clinically useful inducers of differentiation of cancer cells is under study.