A clone of vincristine resistant murine erythroleukemia cells V3.17[44], characterized by high sensitivity to terminal erythroid differentiation induced by hexamethylene bisacetamide, secretes into the extracellular medium a protein factor which partially reduces the latent period before commitment and accelerates the expression of the terminal differentiated phenotype in a slow responding murine erythroleukemia N23 cell variant. This differentiation enhancing factor increases the rate of protein kinase C down-regulation which occurs at slower rate during cell differentiation. The activity of the factor is detected either by coculture of the two cell line variants or by addition of conditioned medium from V3.17[44] cells to a culture of N23 cells in the presence of the inducer. In addition to being secreted by V3.17[44] cells, this factor can also be detected in the cytoplasm of both V3.17[44] and N23 cells, associated with a particulate fraction from which it can be released by sonication.