Surface membrane-associated growth factors are being recognized as important for developmental processes, including cell assembly, differentiation, and growth. To investigate the role of membrane-bound macrophage colony-stimulating factor (M-CSF) in myelopoiesis, and whether this factor is released from the cell surface in association with shed membrane-derived vesicles, COS-1 cells were transfected with cDNAs for M-CSF-tau (containing the transmembrane domain) or a soluble mutant form of the molecule lacking the transmembrane domain ([s]M-CSF- alpha). COS-1 cells transfected with either cDNA released activity into the spent culture medium. Conditioned medium was separated by centrifugation into supernatants and pellets were found to contain plasma membrane-derived vesicles by transmission electron microscopy. When medium fractions were assayed in marrow cultures, activity was localized to shed plasma membrane-derived vesicles in medium conditioned by cells transfected with cDNA for M-CSF-tau and in the vesicle-free supernatants of medium conditioned by cells transfected with cDNA for [s]M-CSF-alpha. In addition, nuclear, mitochondrial, and plasma membrane subfractions of stably transfected cells were prepared and assayed for activity. Concentration-dependent stimulation of macrophage colony formation was observed with purified plasma membranes (but not nuclear or cytosolic proteins) from cells transfected with cDNA for M-CSF-tau. By contrast, membranes from untransfected cells and cells transfected with cDNA for [s]M-CSF-alpha or control DNA expressed no activity. Together, the data indicate that human M-CSF is expressed at the cell surface and exfoliated in association with surface membrane- derived vesicles.