Friend erythroleukemia cells (FLC) passaged in mice are highly tumorigenic and multiply extensively in the livers of suckling DBA/2 mice without differentiating. In contrast, in vitro passaged FLCs injected intravenously were of low tumorigenicity, multiplied to a limited extent in the livers of suckling mice, and underwent marked differentiation from the proerythroblast to the orthochromatic erythroblast stage in the liver. The presence of characteristic C-type virions budding from the cell surface in various stages of erythroid differentiation served as a marker of the injected FLCs. When the same in vitro passaged FLCs that differentiated in the liver were injected subcutaneously in suckling mice, they formed large subcutaneous tumors consisting of sheets of undifferentiated tumor cells. It is concluded that the tumorigenicity of FLCs depended on the site of tumor growth and that there is an inverse correlation between the tumorigenic capacity and the capacity to differentiate.