We have investigated the ability of the v-src oncogene to block the differentiation of the murine myeloid progenitor cell line 32D cl3. In response to granulocyte-colony stimulating factor (G-CSF), 32D cl3 cells are induced to differentiate into mature granulocytes (Valtieri et al., 1987). In contrast, no differentiation was observed following G-CSF treatment of 32D cl3 cells infected with a murine retrovirus carrying the wild-type v-src oncogene. Furthermore, cells infected with a v-src temperature-sensitive (ts) mutant did not differentiate at the permissive temperature, however, at the nonpermissive temperature G-CSF induced granulocytic differentiation. Differentiation of 32D cl3 cells infected with ts WP31A (ts LA31A src gene inserted into amphotropic murine leukemia virus 4070A; Anderson et al., 1987) occurred with the same kinetics as uninfected 32D cl3 cells. Temperature-shift experiments indicate that after 72 hours of treatment with G-CSF at the nonpermissive temperature, approximately half of the 32D cl3 cells infected with ts WP31A virus become committed to differentiation. Prior to that time, activation of v-src by shifting the cells to the permissive temperature resulted in the presence of only undifferentiated blast cells after six days in culture. In contrast to normal 32D cl3 cells, cells infected with the wild-type v-src were tumorigenic when injected into nu/nu Swiss mice. Lesions appeared in the spleen, liver, kidney, lungs and lymph nodes following subcutaneous injection. Growth factor-independent cells were recovered from the tumor, spleen, bone marrow and a lymph node of tumor-bearing nude mouse. Analysis of the proviral integration site by inverse polymerase chain reaction (PCR) demonstrated that the tumor cells were of donor cell origin.