The mechanism of action of gold salts in the treatment of rheumatoid arthritis is unknown. Effects of gold on monocyte-macrophage function could be due to inhibition of maturation and differentiation. We found that 3 markers of monocyte differentiation, loss of peroxidase activity, spontaneous synthesis of C2, and spontaneous cytotoxicity for chicken erythrocytes, were all inhibited by gold treatment. This was not a general toxic effect since phorbol myristate acetate could still induce gold-treated monocytes to lyse chicken erythrocytes. Also, phorbol myristate acetate-stimulated superoxide production, a monocyte function not requiring further differentiation, was not inhibited by incubation with gold. Lymphokine-stimulated cytotoxicity for nucleated target cells, another function of monocytes, was inhibited only partially for certain target cells and not at all for others. These data suggest that gold has the capacity to selectively inhibit some monocyte functions which are associated with macrophage differentiation.