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A compensated hemolytic state was induced in rats by injection of phenylhydrazine (PHZ) over a 6-week period. The liver and kidney were perfused to determine the levels and time of appearance of a hepatic erythropoietic factor (HEF) which induces the production of hepatic erythropoietin (Ep) and its antagonist, a renal inhibitory factor (RIF). Erythropoietin assays on the perfusates have been previously reported. The amount of HEF in perfusates recovered from the livers of the PHZ-treated rats was significantly higher during the 4th to 5th weeks of treatment, coinciding with the time of increased liver production of Ep. During the 6th week of PHZ treatment, the titer of RIF in perfusates recovered from the kidney was markedly increased and the HEF titer was decreased to near the control level, suggesting inhibitory action of RIF on HEF synthesis and/or effect. These findings indicate that an HEF/RIF control mechanism regulates hepatic Ep production in this compensated hemolytic condition.