The cell lines HDLM-2 and L-428 were established from the pleural effusions of two patients with Hodgkin's disease. We studied and compared phenotypic characteristics of HDLM-2 and L-428 cells before and during induction of differentiation with 12-O-tetradecanoylphorbol 13-acetate (TPA) using a number of parameters. TPA-treated HDLM-2 and L-428 cultures did not show adhesion to plastic surface or aggregation of cells; the cells did not develop pseudopodia and were not phagocytic. Only a slight increase in the percentage of NBT-positive cells was observed for L-428 cells. TPA led to a cessation of cell proliferation and to a dose-dependent decrease in the number of viable cells in both cell lines. In HDLM-2 and L-428, treatment with TPA induced distinct morphological changes indicative of a partial differentiation along the myeloid cell lineage. In addition, the production and expellation of benzidine-positive, unnucleated particles were observed in HDLM-2 and L-428 cells. The induced isoenzyme profiles of carboxylic esterase and acid phosphatase resembled those found in myelomonocytic leukemia cell lines. Both cell lines were negative for immunological markers of the T- and B-cell lineages, but reacted with several markers associated with the myelomonocytic cell lineages. HDLM-2 cells produced a factor which could induce differentiation in 12 leukemia cell lines. The overall results suggest that Hodgkin and Sternberg-Reed cells constitute a unique cell type and might be derived from cells of the myelomonocytic cell lineage.