The proinflammatory cytokine, TNF␣ plays a major role in muscle wasting occurring in chronic diseases and muscular dystrophies. Among its other functions, TNF␣ perturbs muscle regeneration by preventing satellite cell differentiation. In the present study, the role of c-Jun N-terminal kinase (JNK), a mediator of TNF␣, was investigated in differentiating myoblast cell lines. Addition of TNF␣ to C2 myoblasts induced immediate and delayed phases of JNK activity. The delayed phase is associated with myoblast proliferation. Inhibition of JNK activity prevented proliferation and restored differentiation to TNF␣-treated myoblasts. Studies with cell lines expressing MyoD:ER chimera and lacking JNK1 or JNK2 genes indicate that JNK1 activity mediates the effects of TNF␣ on myoblast proliferation and differentiation. TNF␣ does not induce proliferation or inhibit differentiation of JNK1-null myoblasts. However, differentiation of JNK1-null myoblasts is inhibited when they are grown in conditioned medium derived from cell lines affected by TNF␣. We investigated the induced synthesis of several candidate growth factors and cytokines following treatment with TNF␣. Expression of IL-6 and leukemia inhibitory factor (LIF) was induced by TNF␣ in wildtype and JNK2-null myoblasts. However, LIF expression was not induced by TNF␣ in JNK1-null myoblasts. Addition of LIF to the growth medium of JNK1-null myoblasts prevented their differentiation. Moreover, LIF-neutralizing antibodies added to the medium of C2 myoblasts prevented inhibition of differentiation mediated by TNF␣. Hence, TNF␣ promotes myoblast proliferation through JNK1 and prevents myoblast differentiation through JNK1-mediated secretion of LIF.