Phorbol diesters with tumor-promoting activity, in particular, 12-0-tetradecanoyl-phorbol-13-acetate (TPA), can induce or inhibit terminal differentiation in a variety of cell systems, with specificity for particular cell lineages. The phorbols are excellent tools to investigate the expression and control of differentiation in some cells and the mechanism by which oncogenic agents interfere with the process of terminal differentiation. The mechanism of action of the phorbols on different target cells is not understood at the present time. It is felt that the status of the cell is of major importance as, in some cases, opposite effects can be achieved by the same concentration of the phorbol diester used. Changes in membranes, receptors, in secretion of prostaglandins and in the level of cyclic AMP have all been reported. However, the relationship of these changes with the alterations in the genetic program involved in the differentiation process is not clear, and the recent report of a possible cell receptor for phorbol diesters should elucidate their mechanism of action. The findings on the effect of phorbol diesters on differentiation have suggested the testable hypothesis that promotion could be mediated through inhibition of cellular differentiation. It has also been suggested that changes in differentiating systems could be of future use in screening for unknown tumor promoters, however, this possibility seems quite remote. Finally, phorbol diesters with tumor-promoting activity appear to exert a specific effect on differentiation of leukemic cells of both mouse and human origin, and therefore, the application of this particular phenomenon in experimental therapy should be the subject of future investigations.