The present studies demonstrate that dimethylsulfoxide (DMSO) treatment of human U-937 myelomonocytic leukemia cells is associated with induction of monocytic differentiation. The DMSO-induced U-937 monocytic phenotype was associated with 1) growth inhibition, 2) loss of clonogenic survival, 3) increases in alpha-naphthyl acetate esterase (NSE) staining, and 4) increases in cell surface expression of the monocyte marker Mac-1. DMSO treatment of U-937 cells was also associated with down-regulation of c-myc and c-myb gene expression as well as with increases in tumor necrosis factor (TNF) mRNA levels. The results further demonstrate that induction of U-937 monocytic differentiation by DMSO is accompanied by increases in phospholipase A2 activity. Moreover, this stimulation of phospholipase A2 was sensitive to dexamethasone. We therefore studied the effects of dexamethasone on DMSO-induced differentiation of U-937 cells. Although dexamethasone had no effect on growth inhibition or loss of clonogenic survival by DMSO, this glucocorticoid blocked increases in NSE staining and cell surface Mac-1 expression. Dexamethasone also had no effect on the down-regulation of c-myc and c-myb expression but blocked the reappearance of c-myb transcripts after 6 hr of DMSO treatment. Finally, dexamethasone inhibited DMSO-induced increases in TNF gene expression. Taken together, the results demonstrate that dexamethasone inhibits multiple characteristics, including the stimulation of phospholipase A2 activity, associated with DMSO-induced monocytic differentiation of U-937 cells.