Cordyceps sinensis is a herb medicine with antitumor activity capable of suppressing the growth of mouse Sarcoma 180 in vivo. In the present study, we have isolated polysaccharide fraction of Cordyceps sinensis (PSCS) and investigated its effect on the proliferation and differentiation of human leukemic U937 cells using an in vitro culture system. Our results showed that the conditioned medium from PSCS (10 microg/ml)-stimulated blood mononuclear cells (PSCS-MNC-CM) had an activity that could significantly inhibit the proliferation of U937 cells resulting in a growth inhibition rate of 78-83%. Furthermore, PSCS-MNC-CM treatment induced about 50% of the cells differentiating into mature monocytes/macrophages expressing nonspecific esterase (NSE) activity and the surface antigens of CD11b, CD14, and CD 68. Yet, the differentiated U937 cells also had functions of phagocytosis and superoxide production. However, PSCS alone or normal MNC-CM had no such effects. The levels of interferon (IFN)-gamma, tumor necrosis factor (TNF)-alpha, and interleukin (IL)-1 were very low in normal MNC-CM, and they were greatly increased in MNC-CM prepared with PSCS stimulation. Antibody neutralization studies further revealed that the tumoricidal and differentiating effects of PSCS-MNC-CM were mainly derived from the elevated cytokines, especially IFN-gamma and TNF-alpha. These two cytokines acted synergistically on inhibiting cell growth and inducing differentiation of the target U937 cells.