Although the ascitic fluid of animals bearing various tumors and that of mice induced by complete Freund's adjuvant had high activity for inducing differentiation of myeloid leukemic cell line (M1) from an SL mouse to macrophages and granulocyte-like cells, the activity in the ascitic fluid of syngeneic mice bearing the M1 cells was markedly reduced. Macrophages and granulocytes were abundant in the active ascites of animals bearing tumors (8 to 12% of the total ascites cells) while in the ascites of syngeneic mice bearing the M1 cells they were not (0.1 to 0.7% of the total ascites cells). Appearance of lymphocytes in the ascites of both types was not significantly different. Although the conditioned media of the Ehrlich tumor cells, M1 cells, and whole ascites cells with the M1 cells were not active in inducing differentiation of the M1 cells, the conditioned media of all the ascites cells with Ehrlich tumor cells and those of peritoneal macrophages and granulocytes in mice did show a high activity. These results indicate that the peritoneal macrophages and granulocytes in the ascites are responsible for the production of factors stimulating differentiation of the M1 cells.