Defects in cellular differentiation are a common occurrence in human cancers. The combination of recombinant human fibroblast interferon (IFN-beta) and the antileukemic compound mezerein (MEZ) results in an irreversible loss of proliferative capacity and terminal cell differentiation in H0-1 human melanoma cells. In contrast, either agent alone induces reversible growth arrest and/or specific components of the differentiation process without inducing terminal differentiation. The current study investigates changes in cell cycle, cell cycle gene expression and E2F transcription factor complex formation during the processes of reversible and irreversible (terminal) differentiation. Induction of both terminal differentiation and reversible differentiation (MEZ treatment) results in a temporal decrease in DNA synthesis and the percentage of cells in S phase and a decrease in the expression of cell cycle and growth regulated genes, including cdc2, cyclin A, cyclin B, histone H1, histone H4, nm23-H1, p53 and c-myc. Persistent gene expression changes occur in terminally differentiated cells, but not in reversibly differentiated cells. H0-1 cells contain several E2F binding activities, including uncomplexed E2F, an E2F-p107-cyclin A-cdk2 kinase complex and an Rb-E2F complex. Induction of growth arrest by MEZ results in a slow migrating gelshift band that contains E2F associated with the pRb2/p130 protein. There is also a loss of the Rb-E2F complex. Induction of terminal differentiation after treatment with IFN-beta + MEZ generates a second pRb2/p130-E2F complex that migrates considerably faster than the pRb2/p130-E2F complex resulting from growth arrest. The slower migrating complex may contribute to growth arrest, whereas the faster migrating complex may play a role in terminal differentiation. Our results demonstrate that terminal cell differentiation involves a co-ordinate and continuous suppression of a number of cell cycle and growth related genes and results in the development of a novel E2F transcription factor complex not apparent in growth arrested and reversibly differentiated human melanoma cells.