Administration of highly purified preparations of murine interferon (IFN)-alpha 1, -alpha 4, -alpha 6, or -beta to Friend leukemia cells induced to differentiate by dimethyl sulfoxide leads to a 100% increase of benzidine-positive (B+) cells. Different efficiencies for the two IFN species have been observed; a 10-fold higher dose of IFN-alpha is needed for stimulation of hemoglobin production and inhibition of cell growth as compared with IFN-beta. Both species of IFN induce a substantial increase in heme, hemoglobin, and transferrin receptor levels. In vitro run-on transcription assays indicate that IFN-beta moderately stimulates transcription of the alpha-globin gene but not the transferrin receptor gene. It is postulated that IFN induces the enhancing effect on differentiation via a marked increase of heme synthesis and number of transferrin receptors, which in turn leads to an enhancement of globin chain synthesis. In this regard, the negative feedback reported in a variety of other cell types for the regulation of transferrin receptor expression by heme does not seem to be operative in maturing Friend erythroleukemia cells, which present evidence for a positive mechanism.