Histone deacetylase (HDAC) inhibitors are a novel class of promising anti-cancer agents. Little information is available on the capacity of structurally different HDAC inhibitors to induce terminal cell differentiation in different cell types in relation to enzyme inhibition and subtype selectivity. Consequently, the aim of this study was to provide a comprehensive comparison of these effects. New biarylalanine inhibitors of HDAC were synthesized and compared to a series of standard inhibitors from different laboratories. Chromatographically purified rat liver and immunoprecipitated FLAG-tagged recombinant human HDACs were used as sources of HDAC activity. Enzyme inhibition was studied using a fluorescent substrate and its conversion was monitored by high-performance liquid chromatography. The ability to induce cell differentiation was compared in murine (Friend DS-19) and human (K562) erythroleukemic cell lines, and was quantified by benzidine staining. Inhibition of cell proliferation was evaluated by cell counting. All HDAC inhibitors were identified as potent inhibitors of erythroleukemic cell proliferation. However, we observed a complex pattern of differentiation induction: structurally similar inhibitors resulted in disparate activity profiles, whereas similar profiles were detected within distinct structural classes. Among the newly synthesized biarylalanine compounds, a 3'-methoxy derivative was identified as a very effective inducer of terminal cell differentiation. We conclude that investigation of subtype selectivity of selected HDAC inhibitors does not provide a clear link between selectivity and the observed cellular activity profile. The predictive value of in vitro HDAC inhibition assays for identifying anti-proliferative compounds has been emphasized.