A cloned, virus-producing, tumorigenic, promonocytic leukemia cell line, AC8, derived from an Abelson murine leukemia virus-infected mouse can differentiate in vitro. Differentiated cells, purified from a population containing undifferentiated cells on the basis of expression of the macrophage differentiation antigens Mac-1 (C3 receptor) and F4/80, were phagocytic, produced lysozyme, were less tumorigenic, and had a reduced replicative capacity compared with undifferentiated cells. Differentiated cells produced less infectious Abelson virus than undifferentiation. Cloning studies indicated that differentiation was the cause rather than the effect of reduced Abelson virus production. However, the intracellular amount and the tyrosine-specific protein kinase activity of the Abelson virus oncogene product, P120v-abl, were not affected by differentiation of the leukemic cells. Thus, these results show that Abelson virus-transformed myeloid lineage cells can differentiate without expression of the viral oncogene product being affected, which implies, in turn, that P120v-abl expression is not sufficient for maintaining transformation by blocking differentiation.