Studies of gene regulation during early hematopoiesis and of the regulatory network that controls differentiation and lineage commitment are hampered by difficulties in isolating and growing stem cells and early progenitor cells. These difficulties preclude the application of standard molecular genetic approaches to these problems. As an alternative approach we have introduced a lacZ-containing promoter-trap retrovirus into hematopoietic cells. We used the interleukin-3- dependent mouse myeloid progenitor cell 32D as a model to identify transcriptionally active genes. The frequency of integrations that led to transcription of the lacZ gene was estimated to be 0.5% of all integrations, of which 14% were downregulated on differentiation of 32D cells towards neutrophils. Thus, one in every 1,000 to 2,000 integrations identified a developmentally regulated gene. Cellular DNA sequences upstream of proviral integrations were isolated by inverse polymerase chain reaction. Five were further characterized and we confirmed by RNA expression analysis that they were downregulated on differentiation. Sequence analysis revealed identification of novel genes with sequence similarity to known genes. Considering the high efficiency of retroviral infection, our study shows the feasibility of using promoter-trap vectors to identity and isolate developmentally regulated genes from early hematopoietic progenitors.