Tumor necrosis factor has traditionally been thought to have direct cytostatic and cytotoxic properties with little or no direct immunomodulatory activity. We report here that tumor necrosis factor is able to activate macrophages both in vitro and in vivo and can increase a mixed lymphocyte response and act as an adjuvant for both T- and B-cells in vivo. Adjuvant activity in T-cells occurred in conjunction with the administration of a suboptimal syngeneic tumor cell vaccine. In addition, tumor necrosis factor demonstrated a potent dose-dependent effect on bone marrow stem cell number, dramatically depressing cellularity and thus total stem cell number. An appreciable interval is required for recovery from such stem cell depletion. Therefore, the study of the therapeutic activity of tumor necrosis factor must include a consideration of its immunomodulatory properties.