In a previous report, we described that tumor necrosis factor (TNF) and granulocyte-macrophage colony-stimulating factor (GM-CSF) synergistically enhanced the development of dendritic cell (DC) progeny from early stem cells and that there is a common monocyte-DC progenitor cell. Low levels of DC were obtained with GM-CSF alone, and TNF by itself failed to induce stem cell development. Here, we investigate mechanisms by which TNF and GM-CSF institute increases in DC, and how these same molecules support later stages of DC differentiation. We show that TNF is required as the first signal, that there is upregulation of GM-CSF receptors (GM-CSFRs), and that TNF inhibits the differentiation of colony-forming units-granulocyte. High levels of GM- CSFR were always associated with conditions yielding a large number of DC, and a kinetic analysis showed a close ontogenic relationship between DC and GM-CSFR levels. The addition of anti-GM-CSF or anti-TNF antibodies blocked synergistic responses related to DC development, including high levels of GM-CSFRs. Anti-GM-CSF was the most potent inhibitor of proliferation (80%) and macrophage, DC, and polymorphonuclear (PMN) cell development. With polyclonal anti-TNF, inhibition was less (35%), and there was a shift from myelomonocytic and DC to PMN progeny. Our results support the concept that receptor upregulation is an important mechanism for growth factor synergy. Our data also indicate that the opposing effects of TNF on hematopoiesis contribute to the selection of the DC pathway and emphasize the importance of GM-CSFRs not only in initiated DC development, but also in controlling DC viability and function.