Normal and transformed erythroid cell precursors provide the opportunity for study of a number of problems relevant to the regulation of proliferation and differentiation in a developmental system. Evidence is presented which suggests that the hormone, erythropoietin, has a primary role in regulating precursor cell proliferation. A wide variety of chemicals can modify the rate at which proliferating transformed precursors initiate expression of the genetic program characteristic of terminal erythroid differentiation. Several sites of inducer action, including the plasma membrane and chromatin, are suggested as part of the pathway which leads to the complex pattern of gene transcription responsible for differentiation.