Let Gr be the category of groups. In this paper we study functors F: Gr Ä Gr which preserve cokernels and filtered colimits. The functor F is linear if the mapis an isomorphism where X 6 Y Ä Y is the sum in the category of groups and r 1 =X 6 Y Ä X, r 2 : X 6 Y Ä Y are the retractions. Moreover F is quadratic if F (X | Y)=kernel(Fr 1 , Fr 2 ) as a bifunctor is linear in X and Y.Our main result shows that the monoidal category of such quadratic endofunctors of Gr is equivalent to the monoidal category of square groups; see (3.10) and (8.9). Here a square group is a diagramwhere M ee is an abelian group, M e is a group of nilpotency degree 2, P is a homomorphism and H is a quadratic function with properties as in (3.5). We show that the quadratic endofunctor F of Gr can be described by a quadratic tensor productwhere M is a square group. A similar result for quadratic endofunctors of the category Ab of abelian groups was obtained in [2]. In (3.10) we specify the square groups corresponding to quadratic functors Ab Ä Gr and Gr Ä Ab respectively. The category of linear endofunctors of Gr which preserve cokernels and filtered colimits is equivalent to the category of abelian groups. In fact such linear endofunctors L of Gr have a factorization L: Gr w Ä ab Ab ww Ä A Ab/Gr Article ID aima.1998.1784, available online at http:ÂÂwww.idealibrary.com on