The suspension pro granulocyte/macrophage (SPGM1) cell line was established from a transplantable mouse progranulocytic/promacrophage tumor. Surprisingly, SPGM1 cells expressed a typical CD5 pre-B cell phenotype, being positive for Ly-1 (CD5), PB76, B220 (CD45RA), and the pre-B Ig receptor complex (microH chains, lambda 5 and vpre-B surrogate L chains, and the IgM alpha (mb-1) and Ig beta (B29) co-receptor molecules). Southern Blot analysis revealed clonal rearrangement of the microH chain locus and germ-line L chain loci. SPGM1 formed blast cell-, macrophage-, and occasional granulocytic colonies in soft agar in the presence of murine IL-3. IL-3 also induced macrophage differentiation of SPGM1 cells in suspension cultures. The earliest changes were detectable at 24 h by Northern blot analysis. IL-3-treatment increased Mac1 mRNA, induced c-fms mRNA, and down-regulated mRNA for mu, lambda 5, vpre-B and mb-1. After 2 to 4 days the cells were larger, strongly adherent, expressed the macrophage markers Mac1 and F4/80, had lost microH chain and PB76 surface expression, and readily phagocytosed latex beads. Thus SPGM1 has all the characteristic features of a CD5+ pre-B cell line. However, IL-3 predominantly induced SPGM1 to switch its differentiation program from a pre-B cell to a macrophage. This inducible, rapid switch of virtually the entire population provides a unique model for the molecular analysis of mechanisms involved in cell-fate determination.