The capacity of rat haemopoietic colony-forming units (CFU) to produce differentiated progeny has been investigated. The colony differential of primary colonies in the spleen was dependent on whether spleen or bone marrow was used as the l source of the CFU. However, both bone marrow and spleen derived colonies showed increases in the proportion of undifferentiated colonies and in the number of both surface and total colonies as the time of colony development was extended. On the other hand, the colony differential of primary colonies in the bone marrow was independent of the source of the CFU. Colonies in the bone marrow did not change in number or histological type as the period of colony development was extended. Since differentiation of CFU was more complete in the bone marrow compared to the spleen, it is suggested that the bone marrow in rats represents the better site to study stem cell differentiation. Calculations based on the results of individual colony transplant experiments suggest that approximately 30% of rat bone marrow CFU do not form colonies in the spleen because they differentiate.