The c-fps/fes proto-oncogene encodes a 92-kDa protein-tyrosine kinase that is involved in myeloid cell development and function. We have recently shown that expression of an activated allele of Fes (Fes(act)) in monocyte precursors resulted in their differentiation into functional macrophages through the activation of lineage-specific transcription factors. We now report that this kinase also plays a role in the survival and terminal differentiation of granulocyte progenitors. The expression of Fes(act) in factor-dependent 32D cells prevented their apoptotic death after interleukin-3 removal, but Fes(act)-expressing cells remained factor-dependent for proliferation. Removal of interleukin-3 from the Fes(act)-expressing cells was followed by granulocytic differentiation in the absence of granulocyte colony-stimulating factor within 4-8 days. The differentiated cells had distinctive granulocyte morphology and there was up-regulation of CD11b, Gr-1, and late differentiation markers such as lactoferrin, suggesting that this kinase induced terminal granulocytic differentiation. Concomitantly, Fes(act) down-regulated the macrophage marker F4/80, suggesting that the biological activity of Fes was coordinated in a lineage-specific manner. Further analysis showed that Fes(act) caused activation of CCAAT/enhancer-binding protein-alpha and STAT3, two transcription factors that are involved in granulocyte differentiation. Our results provide evidence that Fes may be a key component of the granulocyte differentiation machinery, and suggest a potential mechanism by which this kinase may regulate granulocyte-specific gene expression.