The ets family transcription factor PU.1 is required for the development of multiple lineages of the immune system. Using retroviral transduction of PU.1 complementary DNA into mutant hematopoietic progenitors, we demonstrate that differing concentrations of the protein regulate the development of B lymphocytes as compared with macrophages. A low concentration of PU. 1 protein induces the B cell fate, whereas a high concentration promotes macrophage differentiation and blocks B cell development. Conversely, a transcriptionally weakened mutant protein preferentially induces B cell generation. Our results suggest that graded expression of a transcription factor can be used to specify distinct cell fates in the hematopoietic system.