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 PKC alpha (PKC alpha) expression and stimulate the translocation of PKC alpha 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.