The peripheral blood lymphocytes from 42 patients with multiple myeloma (MM) and 13 patients with monoclonal gammopathy of undetermined significance (MGUS) were studied by three-color immunofluorescence (IF) using antibodies directed to a broad range of B-cell markers (CD19, CD20, CD21, CD24), CALLA (CD10), PCA-1 (a plasma cell marker), and to the high and low molecular weight isoforms of the leukocyte common antigen, CD45RA (p205/220) and CD45RO (p 180). CD45RA is expressed on pre-B and B cells, and a transition from CD45RA to CD45RO defines differentiation towards plasma cells. Peripheral blood mononuclear cells (PBMC) from patients with myeloma included a large subset of B- lineage cells (mean of 39% to 45%) that were CALLA+ and PCA-1+ in all patients studied, including newly diagnosed patients and patients undergoing chemotherapy. Southern blot analysis indicated the presence of monoclonal Ig rearrangements in PBMC and a substantial reduction in the germ-line bands consistent with the presence of a large monoclonal B-cell subset. Avoidance of purification methods involving depletion of adherent cells was essential for detection of the abnormal B cells. Phenotypically, this abnormal B-cell population corresponded to late B or early pre-plasma cells (20% to 80% of PBMC), as defined by the concomitant expression of low densities of CD19 and CD20, moderate densities of CALLA and PCA-1, and strong expression of CD45RO on all B cells, with weakly coexpressed CD45RA on a small proportion. Heterogeneity in the expression of CD45RA and CD45RO within the abnormal B-cell population from any given patient suggested multiple differentiation stages. Abnormal B cells similar to those in MM were also detected in MGUS, although as a lower proportion of PBMC (26%). Abnormal B cells from patients with MGUS expressed predominantly the CD45RO isoform, but had a lower proportion of CALLA+ and PCA-1+ cells than were found on B cells from MM. This work indicates that the large subset of circulating monoclonal B lymphocytes from myeloma patients are at a late stage in B-cell differentiation, continuously progressing towards the plasma cell stage.