We have previously demonstrated that differentiation of CD8+ Tp44- suppressor cells in pokeweed mitogen (PWN)-stimulated cultures requires soluble factors elaborated by CD4+ cells and monocytes, and that the monocyte signal for such differentiation can be replaced by prostaglandin E2 (PGE2). In this study, we explored the ability of interleukin 2 (IL 2) and interferon-γ (IFN-γ) to replace the CD4+ signal. When IL 2 or IFN-γ was used at concentrations equivalent to those present in supernatants of PWM-pulsed cultures of CD4+ cells, no effect on differentiation of CD8+ cells was observed. However, a potent suppressor inducing activity was detected when IFN-γ, but not IL 2, was mixed with supernatants derived from cultures of PWM-pulsed purified monocytes (MΦ sup) or with 10-8 M PGE2. Differentiated CD8+ suppressor cells (Ts) inhibited both PWM-stimulated proliferative response of CD4+ cells and immunoglobulin production by B cells. The signals mediated by the MΦ sup or PGE2 and IFN-γ were shown to act sequentially. That is, MΦ sup or PGE2 was required initially, followed by an IFN-γ-dependent differentiative step. These studies thus suggest a cascade of cellular interactions involving monocytes, CD4+ cells, and CD8+ Ts precursors that are required for the differentiation of CD8+ suppressor effector cells.