Assay of hematopoietic precursor cells in diffusion chambers (DCs) implanted intraperitoneally in experimental animals provides a powerful tool for studying stem cell kinetics in vivo. In this system, the effect of cell migration (which complicates whole animal studies) is eliminated because the membranes utilized in the construction of the chambers are impermeable for cells, while permitting free passage of molecules present in the humoral phase of the host. As judged by light microscopy, conditions in the DC cultures primarily favor macrophage and granulocyte growth. However, the use of in vitro and in vivo subculture to further analyze chamber contents has demonstrated that the system supports proliferation of early hematopoietic progenitors. Additionally, cells capable of rescuing lethally irradiated mice proliferate in DC cultures. Development of the plasma clot DC technique has revealed that most of the growth occurs in colonies which are derived from single cells (CFU-d). Characterization of these cells indicates that they are at least as primitive as other colony-forming cells and, also based on subculture studies, can differentiate along several hematopoietic lineages. In addition to normal CFU-d, both embryonal and leukemic cells can give rise to granulocytes, macrophages, megakaryocytes and erythroid cells in the DC cultures. Evaluation of the effects of humoral factors on hematopoietic cell proliferation and differentiation in the system has led to the identification of both stimulators and inhibitors that may be different from the well-characterized cytokines. Thus, the system seems to be useful for detecting molecules controlling the most primitive stages of hematopoiesis. We believe that the DC culture technique holds enormous potential in the study of stem cell proliferation and differentiation in vivo.