Apoptosis of normal and leukemic immature B-cells in vitro is suppressed by contact with bone marrow-derived stromal layers. In stroma-supported cultures of immature B-cells, we found that ligation of CD38, a type II transmembrane protein, inhibited the cell growth and induced apoptosis. CD38 ligation also induced tyrosine phosphorylation and activation of intracellular substrates, including syk, phospholipase C-gamma, c-cbl, and phosphatidylinositol 3-kinase (PI 3-K). Wortmannin and LY294002, two potent inhibitors of PI 3K, rescued immature B cells from CD38-mediated growth suppression. In vitro culture of leukemic lymphoblasts may have potentially important clinical application. First, stroma-supported cultures of acute lymphoblastic leukemia (ALL) cells can determine the growth potential of leukemic cells. In a series of 70 children enrolled in a single program of chemotherapy, cell growth on stroma was a powerful and independent prognostic indicator. Second, a culture system capable of maintaining the majority of ALL blast cells at high levels of viability is also ideally suited for testing antileukemic drugs. Promising results were obtained with 2-chloro-deoxyadenosine and interleukin-4, leading to clinical trials of these two compounds in children with refractory ALL. In addition, we compared the direct antileukemic activities of dexamethasone and prednisolone and found that dexamethasone is five to six times more cytotoxic (on a molar basis) than prednisolone, in agreement with the anti-inflammatory activities of these drugs. This finding may serve to guide the selection of dexamethasone dosage in the treatment of ALL.