Murine erythroleukemia (MEL) cells are transformed erythroid precursors that are blocked from completing the late stages of erythroid differentiation. A frequent event in the generation of these malignant cells is deregulation of the hematopoietic-specific transcription factor PU.1 (Spi-1) by retroviral insertion of the spleen-focus-forming virus component of Friend virus. During chemically induced reinitiation of MEL cell terminal differentiation, expression of PU.1 is rapidly down-regulated, suggesting that PU.1 might interfere with processes required for terminal differentiation of erythroid precursors. To investigate the role of PU.1 in erythroid differentiation we transfected MEL cells with a PU.1 cDNA controlled by the eucaryotic translation elongation factor EF1 alpha promoter. Deregulated expression of PU.1 blocked chemically induced differentiation and terminal cell division. Deregulated expression of two other protooncogenes, c-myc and c-myb, also has been shown to block MEL differentiation. We present evidence that PU.1 inhibits terminal differentiation at an earlier step than c-Myc and c-Myb. Thus reinitiation of MEL cell terminal differentiation appears to be controlled by an ordered program of turning off several protooncogenes. Down-regulation of PU.1 may be a very early step in this program.