Leukaemia Inhibitory Factor (LIF), an interleukin 6 (IL-6)-type cytokine, is an essential growth factor for murine embryonal stem cells, The LIE-receptor was known in these cells, but the cell-internal part of the signal cascade and the transcription factors through which LIF controls its growth-promoting target genes in embryonal stem cells, had not been identified, This study shows that the type LI IL-6-response element of the rat alpha(2) macroglobulin (alpha(2)M) gene, which mediates IL-6- and LIE-responses in hepatic cells, also functioned as a LIE-response element (LIE-RE) in ES1 embryonal stem cells and P19 embryonal carcinoma cells, It conferred transcriptional activation by LIF of transfected reporter constructs in these cells, A characteristic DNA-binding activity interacting with this LIE-RE was induced by treatment of these cells with LIE The complex between this activity and the LIF-RE had identical electrophoretic mobility, sequence-specificity and kinetics of induction as the complex with the corresponding LIE-response factor (LIF-RF) from hepatic cells, The transcription factor STAT3 was part of this complex, as shown by its reactivity with anti-STAT3 antibodies, Withdrawal of LIF from ES1 cells caused the induction of differentiation and the disappearance of this DNA-binding activity, Simultaneously, the surface density of high-affinity LIF receptors was reduced approximately 10-fold. (C) 1995 Academic Press Limited.