Hysotonic lysis of mature human blood granulocytes yielded an extract which reduced granulopoiesis and enhanced macrophage formation of mouse bone marrow cells cultured for 7 days in diffusion chambers (DC). The low molecular weight fraction (MW less than 15,000-25,000 Daltons) obtained by Amicon filtration of the extract, reduced granulopoiesis without affecting macrophage formation. The high molecular weight fraction (MW greater than 15,000-25,000 Daltons) reduced the number of granulocytes and increased the number macrophages. Erythrocyte extract increased the macrophage formation in DC but did not alter the number of granulocytes. The spleen colony assay showed that the granulocyte extract increased the number of CFU-S in DC. It is suggested that the granulocyte extract contain an inhibitor of stem cell differentiation to myeloid cells thereby reducing the number of proliferative granulocytes in DC 7 days later. The inhibitor of differentiation may lead to an increased self renewal of the stem cell in the DC system.