Granulocyte macrophage colony-forming cells (GM-CFC) have the potential to develop into either macrophages and/or neutrophils. With a highly enriched population of these cells we have found that although GM-CFC are equally responsive to macrophage colony stimulating factor (M-CSF) and stem cell factor (SCF) in terms of DNA synthesis, M-CSF stimulated the development of colonies containing macrophages in soft gel assays, while SCF promoted neutrophilic colony formation. When SCF and M-CSF were combined, mainly macrophage development was stimulated both in soft agar colony-forming assays and liquid cultures. An analysis of some potential signaling mechanisms associated with cytokine-mediated developmental decisions in GM-CFC revealed that M-CSF, but not SCF, was able to chronically stimulate phosphatidylcholine breakdown and diacylglycerol production, indicating that protein kinase C (PKC) may be involved in the action of M-CSF. Furthermore, M-CSF, but not SCF, can increase the levels of PKCα (PKCα) expression and stimulate the translocation of PKCα to the nucleus. When the PKC inhibitor, calphostin C, was added to GM-CFC cultured in M-CSF then predominantly neutrophils were produced, conversely PKC activators added with SCF stimulated macrophage development. The data indicate a role for PKC in M- CSF-stimulated macrophage development from GM-CFC.