The regulatory mechanism of differentiation of granulocyte and macrophage precursor cells (G/M CFU-C) in bone marrow and spleen obtained from nude mice bearing colony-stimulating factor (CSF) producing tumor (G-mice), which developed marked granulocytosis, was studied. In these mice, granulopoiesis is enhanced in the spleen, but suppressed in bone marrow. Coculture of G-mouse bone marrow cells with splenic cells of control nude mice (C-mice) and of G-mice resulted in 68% and 62%, respectively, more colonies than expected, while coculture of C-mouse bone marrow cells with these two sources of cell fractions resulted in only 2% and 11% more colonies. In the double-layer agar culture system, bone marrow and splenic cells of C- and G-mice produced a maximal number of colonies containing adequate amounts of human urinary CSF in the upper layer when C-mouse bone marrow cells were added to the lower layer, while these four sources of cells produced a moderate or minimal number of colonies when splenic cells of C- and G- mice or G-mouse bone marrow cells were added to the lower layer. Morphological examination of colonies formed in the upper layer revealed that addition of C-mouse bone marrow cells or irradiated G- mouse bone marrow cells to the lower layer resulted in a massive increment in the number of colonies with pure granulocytes and granulocyte and macrophage mixed (G + G/M) colonies formed by G-mouse bone marrow cells in the upper layer. However, the addition of irradiated C-mouse bone marrow cells or G-mouse bone marrow cells before irradiation to the lower layer did not change G + G/M colony formation by G-mouse bone marrow cells in the upper layer. We could reproduce these findings with conditioned media obtained from 3-day liquid cultures of these cell fractions. This suggests that a diffusible factor may be necessary for inhibition of G + G/M colony formation in G-mouse bone marrow cells. The fine mechanism of such inhibition remains to be clarified.