Expression of HLA-DR surface antigens by granulocyte/monocyte colony- forming cells (CFU-GM) may be important in the regulation of proliferation of these cells. Using immunological techniques to enrich for progenitor cells, we investigated the expression of HLA-DR in subsets of CFU-GM. “Early” (day 14) CFU-GM express higher levels of HLA- DR than do “late” (day 7) CFU-GM. Among late CFU-GM, cells destined to form monocyte (alpha-naphthyl acetate esterase-positive) colonies express higher levels of HLA-DR than do CFU-GM destined to form granulocyte (chloroacetate esterase-positive) colonies. Because high- level expression of DR antigen was a marker for monocyte differentiation, we examined several lymphokines for their effects on both DR expression and in vitro commitment to monocyte differentiation by myeloid precursor cells. DR antigen density could be increased by more than twofold over 48 hours upon exposure to gamma-interferon (gamma-IFN), whereas colony-stimulating factors had no effect. This was associated with a dose-dependent inhibition of total CFU-GM number, and a relative, but not absolute, increase in the ratio of monocyte colonies to granulocyte colonies. Similarly, in day 7 suspension cultures of purified myeloid precursor cells, gamma-IFN inhibited cell proliferation and increased the ratio of monocytes to granulocytes. Thus, despite the induction of high levels of HLA-DR antigen on precursor cells (a marker of monocyte commitment), the dominant in vitro effect of gamma-IFN was inhibition of granulocyte differentiation.