Cytotoxic effects of daunomycin were investigated upon differentiation of Friend erythroleukemia cells induced with hexamethylene bisacetamide, a process during which a 20-fold increase in the hemoglobin content occurred. Daunomycin proved to be more toxic to differentiated Friend cells than to their undifferentiated counterparts. No changes in the daunomycin uptake rates of the two cell types were detectable. Externally added catalase and desferrioxamine mesylate protected against the additional cytotoxicity of daunomycin in differentiated cells, pointing to hydrogen peroxide and iron ions as mediators of the toxic effect. Daunomycin-dependent, cyanide-insensitive oxygen consumption of control and induced cells did not differ significantly, and the rate of formation of the daunomycin semiquinone radical electron paramagnetic resonance signal was similar in both cell types, indicating that the difference in toxicity was not due to increased drug activation by plasma membrane enzymes. Differentiated cells had a lowered catalase content; the cellular iron content was shown to increase by 2.8-fold upon cell differentiation, with hemoglobin-bound iron being about 50% of the total. Altogether, the results suggest increased intracellular hydrogen peroxide generation mediated by hemoglobin, combined with a decrease in catalase activity and an increase in accessible iron, as responsible for the higher sensitivity to daunomycin shown by differentiated Friend cells. This represents the first experimental system where the increase in anthracycline cytotoxicity upon cell differentiation can be attributed to redox activation and the formation of reactive oxygen species.