We studied the effects of interleukin-4 (IL-4) and interferon-gamma (IFN-gamma) on the expression of CD38 and human leukocyte antigen (HLA)-DR on purified CD34+ bone marrow progenitor cells. CD34+CD38- and CD34+HLA-DR- cells are largely nonoverlapping populations. After culture for 4 days in IFN-gamma, the expression of CD38 and HLA-DR is significantly increased and the disappearance of the CD38- and HLA-DR- populations is virtually complete. Moreover, IFN-gamma induces a population of CD34+ cells with a very high expression of CD38 (CD34+CD38++ cells), which were absent in the initial CD34+ population. IL-4 has no effect on the expression of CD38, but induces a limited but significant increase in the expression of HLA-Dr. After culture in IFN-gamma, CD34+ cells show a higher cloning efficiency of the colony-forming unit-macrophage (CFU-M) and burst-forming unit-erythroid (BFU-E) compared to cells cultured in medium alone. After culture in IL-4, a limited increase in CFU-granulocyte (CFU-G) and BFU-E is seen, whereas CFU-G, CFU-M, and BFU-E are increased after culture in IL-4 plus IFN-gamma. We further investigated the functional properties of the CD34+CD38++ cells generated in the presence of IFN-gamma. This cell population is highly enriched for BFU-E but partially depleted of CFU-M. Most of the CFU-M were found in the CD34+CD38+/-(CD34+CD38- and CD34+CD38+ cells) population.