PSK, a protein-bound polysaccharide extracted from the mycelia of Coriolus versicolor (Fr.) Quel, stimulated tumor necrosis factor-induced cytotoxicity against mouse L-929 fibroblast. PSK also stimulated interferon-gamma-induced differentiation of human myelogenous leukemic U-937 and THP-1 cells. The differentiated cells had higher proportions of cells that expressed NBT-reducing activity and alpha-naphthyl acetate esterase activity. Among four PSK subfractions, the highest molecular weight fraction (MW greater than 200 kD) had the most potent stimulating activity. This is the first report regarding direct PSK modulation of cytokine action.