We examined the effect of diffusible factors generated during the culture of the KM102 stromal cell line as well as in long-term bone marrow culture (LTBMC) on K562 leukemia cells, with respect to proliferation of clonogenic cells as well as total cells, and compared it with the effect on normal myeloid progenitors (CFU-GM). Proliferation of K562 cells plated in diffusion chambers was inhibited by coculture for 3-5 days in the fluid phase of stromal cell cultures or stromal cell-conditioned medium (CM), while CFU-GM proliferation was not inhibited under the same culture conditions. The inhibitory action was not attributed to the exhaustion of nutrients or growth promoting factors such as stem cell factor. These findings suggest that bone marrow stromal cells secrete diffusible molecule(s) which exert a preferential inhibitory effect on K562 leukemic cells vs, normal CFU-GM. Neutralization with antibodies against hematopoiesis-inhibiting cytokines such as TGF-beta 1, IFN-gamma, MIP-1 alpha and IL-4 which were detected in stromal cell-CM, failed to abrogate the inhibitory effect of KM102-CM on K562 cells. IL-1, TNF-alpha, IFN-alpha and lipopolysaccharides, known as stimulators of various cytokines from stromal cells, could not enhance the inhibitory activity. Further characterization of the factors may have implications for the treatment of leukemias.