The small bHLHZip protein, Max, was originally identified through its interaction with Myc family proteins and appears to be an obligate partner for Myc function. Max has now been found to interact with at least two other proteins, Mad and Mxi1. These also belong to the bHLHZip class but are otherwise unrelated to Myc. Mad has been shown to abrogate the positive transcriptional activity of Myc and to inhibit Myc in co-transformation assays. This suggests that Mad may antagonize Myc function. Mad is rapidly induced upon differentiation, a time when Myc is frequently down-regulated. We show here evidence for Mad expression upon differentiation of myeloblasts, monoblasts, and keratinocytes. Mad:Max complexes are detected during differentiation and appear to replace the Myc:Max complexes present in proliferating cell populations. Since these complexes appear to form even in the presence of Myc, there may exist mechanisms that act to inhibit Myc:Max, or to promote Mad:Max, complex formation. We speculate that Max complex switching causes a change in the transcriptional activity of groups of target genes. Mad is not induced in all differentiating cell types, suggesting that other, possibly tissue-restricted, proteins might act in similar switch mechanisms to effect changes in transcriptional programs. We have also developed an approach to identification of the gene targets for Myc:Max complexes. By employing an immunoisolation procedure, we have begun characterization of several clones whose expression levels correlate with those of c-myc. Further identification of Myc-regulated genes may allow us to determine the molecular mechanism by which Myc governs cell proliferation and differentiation.