The cellular origin of the K 562 cell line, established from a patient in the blast crisis of chronic myeloid leukemia has been investigated. In agreement with previous reports, an erythroid differentiation was observed. A minority of immature, but hemoglobinized erythroblasts were identified both by electron microscopy and by immunofluorescence using an antibody to gamma-globin chains. Embryonic and fetal hemoglobin (Hb) were synthesized. Hemin increased the number of erythroblasts as well as the absolute amount of Hb synthesized: the Hb pattern was also significantly modified. By cytochemical ultrastructural detection of peroxidase activity (PA), a weak PA, distinct from granulocytic peroxidases, was found exclusively in the nuclear envelope and rough endoplasmic reticulum in a small number proportion of cells. In its localization this PA resembled that of normal and leukemic promegakaryoblasts. The addition of sodium butyrate or dimethylformamide markedly increased the number of these cells (up to 30%) but did not modify their cytoplasmic maturation. No modification of Hb synthesis was observed. Cloning of the K 562 line revealed a marked heterogeneity from one clone to another in Hb production, in the phenotype of Hb synthesis, and in the inducibility by butyrate or dimethylformamide. An inverse relationship between the number of cells with PA and Hb production was found in the different clones. Recloning some of these primary clones resulted in secondary clones, which displayed properties similar to those from which they had originated. All attempts to obtain granulocytic differentiation by addition of different inducers failed. These results clearly indicate that the K 562 cell line arises from the proliferation of bipotent stem cells, these cells possessing variable capacities of differentiation toward erythroid and presumably megakaryocytic cell lineages.