Cyclic AMP and DIF-1 (1-(3,5-dichloro-2,6-dihydroxy-4-methoxyphenyl)-1-hexanone) together induce stalk cell differentiation in vitro in Dictyostelium discoideum strain V12M2. The induction can proceed in two stages: in the first, cyclic AMP brings cells to a DIF-responsive state; in the second, DIF-1 alone can induce stalk cell formation. We report here that during the DIF-1-dependent stage, cyclic AMP is a potent inhibitor of stalk cell differentiation. Addition of cyclic AMP at this stage to V12M2 cells appreciably delays, but does not prevent, stalk cell formation. In contrast, stalk cell differentiation in the more common strain NC4 is completely suppressed by the continued presence of cyclic AMP. This fact explains earlier failures to induce stalk cells in vitro in NC4. We now consistently obtain efficient stalk cell induction in NC4 by removing cyclic AMP in the DIF-1-dependent stage. Cyclic AMP also inhibits the production of a stalk-specific protein (ST310) in both NC4 and a V12M2 derivative. Adenosine, a known antagonist of cyclic AMP action, does not relieve this inhibition by cyclic AMP and does not itself promote stalk cell formation. Finally, stalk cell differentiation of NC4 cells at low density appears to require factors in addition to cyclic AMP and DIF-1, but their nature is not yet known. The inhibition of stalk cell differentiation by cyclic AMP may be important in establishing the prestalk/prespore pattern during normal development, and in preventing the maturation of prestalk into stalk cells until culmination.