Cell differentiation is essential for normal growth and homeostasis, and drug-induced differentiation of tumor cells into benign or normal cells is an important approach for anticancer chemotherapy. Studies of induction mechanisms for cell differentiation and discovery of differentiation-inducing factors are thus critical components of drug development. The Screening of differentiation-inducing factors, such as purified aldehyde reductase, a xenobiotic metabolite enzyme, that induces differentiation of human acute myeloid leukemia HL60 cells into monocyte/macrophage cells is described. Mechanisms of all-trans-retinoic acid (RA)-induced differentiation are also covered. RA is a potent inducer of HL60 cell differentiation and when used as a sole agent it can induce complete remission in patients with acute promyelocytic leukemia (APL). While one mechanism of the effect of RA involves RA nuclear receptors, retinoylation (a posttranslational modification of proteins by RA) may be a new nongenomic mechanism by which RA acts on cells. An early event in RA-induced differentiation may be retinoylation of RIIα (regulatory subunits of cAMP-dependent protein kinase), in which RIIα units are retinoylated and the retinoylated RIIα is then translocated to the nucleus. Drugs can also be combined with RA in RA-differentiation therapy. Cytodifferation therapy by RA in APL patients exhibits limitations due to the resistance of relapsed patients to further RA treatment. This may occur through the induction of expression of various genes that reduce RA blood concentrations. Treatment with combinations of RA and other agents may be one way to reduce induction of those genes. Good candidates for such agents include cAMP-elevating agents, retinoids, steroids, and fatty acids that synergistically induce differentiation of HL60 cells. Two derivatives of falconensone A, falconensone A p-bromophenylhydrazone, which has a bromophenyl residue, and falconensone A dioxime, which possesses a hydroxy residue, were synthesized to incorporate features of RA and N-[4-hydroxyphenyl]retinamide. Both derivatives have exhibited more potent biological activity than the parent falconensone A in vitro and in vivo.