We examined the effect of LPS-induced differentiation on surface and secreted IgM in a cloned BCL1 in vitro cell line. Incubation of this cell line with LPS resulted in a decrease in the amount of membrane IgM, measured by both immunofluorescence and immunoprecipitation, and an increase in IgM secretion, measured by plaque-forming cells (PFC). Activation to high rate secretion was independent of cell cycle in synchronized cells and was independent of DNA synthesis because PFC formation was not inhibited by hydroxyurea. Almost all cells in the in vitro line were shown to contain large quantities of intracytoplasmic IgM before LPS activation. Thus, it would appear that the in vitro cell line represents a partially activated stage of differentiation compared to normal resting B cells or to the in vivo line of BCL1. Analysis of the two forms of mRNA coding for membrane and secreted IgM showed that, at least for cells at the level of differentiation examined here, the control of membrane IgM expression is post-transcriptional. The differentiation of resting B cells to the plasma cell level appears to consist of multiple stages of differentiation. The present data suggest that LPS provides at least two signals of activation. One induces the resting cell to synthesize cytoplasmic IgM, increase surface IgM, and to begin cell division. The second induces the secretion of intracytoplasmic IgM associated with a decrease in surface IgM.