The inhibition of dimethyl sulfoxide-induced differentiation of Friend erythroleukemia cells by steroids led us to examine these cells for the presence of glucocorticoid receptors. Direct assessement of dexamethasone binding revealed high-affinity dexamethasone receptors on the untreated cells. The specific binding of [3H]dexamethasone was dose dependent. At a concentration of 10(-8) M, almost all binding sites were occupied. The mean number of binding sites per cell in two separate experiments was 8045 and 7191, respectively, and the Kd varied between 3.38 and 3.49 x 10(-9) M. Dimethyl sulfoxide treatment led to a decrease in the number of dexamethasone binding sites on the cells induced to differentiate. After 5 days of treatment, the mean number of sites per cell was reduced to 1216 and 896 in two experiments, with a Kd of 5 x 10(-9) M. Dexamethasone treatment resulted in a moderate decrease in the efficiency of colony formation within 72 hr after the cells were plated in methylcellulose. The mechanism of this inhibitory effect is unknown. However, it was also dose dependent and could be abrogated by appropriate concentrations of progesterone or 11-deoxycortisone. These results suggest that the steroid effects on growth and differentiation of the erythroleukemia cells may be mediated via glucocorticoid receptors.