Stat family transcription factors are activated in response to a variety of cytokines to bind to a class of DNA elements termed gamma interferon activation site (GAS)-like elements. Here we investigate two GAS-binding transcription factors, the gamma-interferon activation factor (GAF) and the differentiation-induced factor (DIF) that are activated by interferon-gamma (IFN-gamma) in U937 cells. Treatment of U937 cells with phorbol ester (TPA) induces differentiation from a promonocyte into a monocyte stage of macrophage development. Monocytic differentiation led to an increased transcriptional response of GAS-containing genes to IFN-gamma. TPA treatment also caused a profound change in the IFN-gamma activation of GAF and DIF. GAF DNA-binding activity was activated much better in the monocyte stage and the GAF constituent Stat 1 showed increased phosphorylation. In contrast, DIF activation by IFN-gamma was found in promonocytes but was virtually absent in monocytes. Moreover, DIF activation was observed during TPA-induced monocytic differentiation and after treatment of macrophages with the macrophage differentiation factor CSF-1. Our data suggest DIF to be part of a developmental program leading to terminal macrophage differentiation and GAF to be a transcription factor bringing about the stronger activation response of mature macrophages to IFN-gamma.