Different hematopoietic cells produce minute amounts of beta-related interferon (IFN) following induction of differentiation by chemical or natural inducers. The endogenous IFN binds to type I cell surface receptors and modulates gene expression in the producer cells. We show that self-induction of two members of the IFN-induced gene family differs in the dose response sensitivity and the prolonged kinetics of mRNA accumulation from the response to exogenous IFN-beta 1. Production and response to endogenous IFN are also detected when bone marrow precursor cells differentiate to macrophages after exposure to colony stimulating factor 1. In M1 myeloid cells induced to differentiate by lung-conditioned medium, addition of antibodies against IFN-beta partially abrogates the reduction of c-myc mRNA and the loss in cell proliferative activity, which both occur during differentiation. The endogenous IFN therefore functions as an autocrine growth inhibitor that participates in controlling c-myc suppression and the specific G0/G1 arrest during terminal differentiation of hematopoietic cells.