Morphological and functional characteristics of a permanent human leukemia cell line (DD) that possesses myelomonocytic features were investigated. The cells bear a second type Fc gamma receptor and form rosettes with sheep erythrocytes sensitized with rabbit IgG (EA). However, the surface-bound EA is not internalized. The cell line lacks the surface markers CD2, CD19, CD14, HLA-DR, Fc gamma receptor I, Fc gamma receptor III, and CR3. alpha 1-Antitrypsin, lysozyme, Factor XIII a subunit of blood coagulation, and acid phosphatase reactions were negative. A terminal differentiation of the DD cell line was observed when the expression of CD14, CR3, Fc gamma receptor I, and Fc gamma receptor III was induced. The DD cells induced with 12-O-tetradecanoylphorbol-13-acetate or Escherichia coli lipopolysaccharide can internalize EA via Fc gamma receptor II and complement-coated yeast in the function of the inducers. The phagocytic ability appears to be parallel with the appearance of enzymes which participate in phagocytosis.