Representational difference analysis (RDA) cloning has identified transcriptional intermediary factor 1 beta (TIF1beta) as a gene inducibly expressed early during myeloid differentiation of the promyelocytic cell lines HL-60 and U937. To assess the role of TIF1beta, U937 cell lines were made that expressed antisense-hammerhead ribozymes targeted specifically against TIF1beta mRNA. These cells failed to differentiate into macrophages, as determined by several criteria: a nonadherent morphology, a failure to arrest cell cycle, lowered levels of macrophage-specific cell surface markers, resistance to Legionella pneumophila infection, a loss of the ability to phagocytose and chemotax, and decreased expression of chemokine mRNAs. One way TIF1beta acts in macrophage differentiation is to augment C/EBPbeta transcriptional activity. Furthermore, we show by EMSA supershifts and coimmunoprecipitation that C/EBPbeta and TIF1beta physically interact. Although TIF1beta is necessary for macrophage differentiation of U937 cells, it is not sufficient, based on the inability of ectopically expressed TIF1beta to induce or augment phorbol ester-induced macrophage differentiation. We conclude that TIF1beta plays an important role in the terminal differentiation program of macrophages, which involves the coactivation of C/EBPbeta and induction of C/EBPbeta-responsive myeloid genes.