Lymphocytes that inhibit hematopoiesis may have a pathogenic role in some forms of bone marrow failure, and lymphocyte-mediated suppression may also be important in the normal regulation of bone marrow function. We have investigated the mechanism of in vitro suppression of hematopoiesis by T cells by using the methylcellulose colony culture system. Total peripheral blood T cells and separated subpopulations of helper (OKT4+) and suppressor (OKT8+) cells that have been stimulated by exposure to lectin suppress autologous colony formation by bone marrow myeloid (CFU-C) and erythroid (BFU-E) progenitor cells. Medium conditioned by these cells is also inhibitory, indicating that the suppressor activity is a soluble factor. A strong correlation existed for the concentration of interferon and the degree of hematopoietic suppressor activity in these supernatants; both activities peaked at days 3 to 5 of incubation and had sharply declined by day 7. Interferon production was enhanced by exposure of lymphocytes to sheep red blood cells during the rosetting procedure. Specific antiserum and a monoclonal antibody directed against gamma-(immune) interferon abrogated the inhibitory activity for hematopoiesis produced by lectin-stimulated T cells; an antiserum to alpha-interferon was generally much less effective in neutralizing activity. We infer from these results that gamma-interferon is the mediator of hematopoietic suppression generated by lectin-treated T-cells.