To characterize juvenile chronic myelogenous leukemia (JCML), the proliferative properties of bone marrow (BM) and peripheral blood (PB) cells from nine patients were studied using assays for CFU-C and CFU-GEMM and liquid cultures. All specimens showed two reproducible abnormalities: impaired growth of normal hematopoietic progenitors and excessive proliferation of monocyte-macrophage colonies in the absence of exogenous colony-stimulating activity (CSA). Cytogenetic studies in one patient indicated that the CFU-C were malignant because BM cells at diagnosis and monocyte-macrophage colonies showed an abnormal karyotype, whereas PB lymphocytes did not. In contrast to JCML, PB from six adults with Philadelphia (Ph1) chromosome-positive chronic myelogenous leukemia (Ph1 + CML) yielded CSA-dependent CFU-C colonies which were composed of granulocytes, macrophages, or both, as well as exuberant growth of BFU-E colonies. Co-cultures of JCML BM adherent or nonadherent cells with normal BM resulted in suppression of normal hematopoietic colony formation. Supernatant from JCML adherent cells in liquid culture or plasma from newly diagnosed untreated JCML patients also suppressed control BM colony growth in a dose-dependent manner. These findings confirm that JCML is a malignant disorder of monocytic lineage and suggest that the mechanism of hematopoietic failure in JCML is mediated by an inhibitory monokine secreted by malignant JCML cells.