Multipotent murine stem cell lines (FDC-Pmix) depend on IL-3 for self-renewal and proliferation and can be induced to differentiate into multiple hematopoietic lineages. Single FDC-Pmix cells infected with retroviral vectors expressing GM-CSF are induced to differentiate into granulocytes and macrophages. This results in a complete loss of clonogenic cells if IL-3 is not exogenously supplied; however, multipotent variants can be selected that do not terminally differentiate if cells are kept in the presence of IL-3. Unidirectional and synchronous granulocyte and macrophage differentiation accompanied with loss of self-renewal capacity is induced when IL-3 is removed. Our data indicate that activation of the GM-CSF receptor induces differentiation of stem cells by an instructive mechanism that can be blocked by the activated IL-3 receptor. A model of how receptors can induce proliferation and cell-specific differentiation by two separate pathways is discussed.