A functional subpopulation of murine B lymphocytes proliferate in semisolid agar culture in the presence of 2-mercaptoethanol to form colonies. The effects of diffusible macrophage-derived factors on this focal proliferation was investigated using a two-layer culture system which prevented macrophage-lymphocyte contact and permitted B-cell activation to be critically assessed under conditions of extremely low cell densities. Adherent peritoneal macrophages incorporated within underlayers of spleen or lymph node cell cultures potentiated both the number and size of developing B-cell colonies. These effects were most striking when low numbers of spleen or lymph node cells, or macrophage- depleted lymphoid cell suspensions were used. Thus, macrophage-depleted lymph node ceils gave rise to virtually no colonies, but colony-forming ability was restored by the presence of an optimal number of macrophages. When the number of macrophages exceeded that required for optimal stimulation, colony formation was suppressed; an effect which was largely prevented by indomethacin, an inhibitor of prostaglandin synthesis. Under these conditions, stimulation and inhibition of B-cell activation by macrophages could be dissociated, indicating that each signal is selectively controlled by individual molecules elaborated by the macrophage. With an appropriate number of macrophages required for B-cell activation, and sufficient indomethacin to inhibit the accumulation of macrophage-derived prostaglandin, B-lymphocyte clonal proliferation was a linear function of the number of B cells placed in culture. In the absence of macrophages, B-cell colony formation was potentiated by both lipopolysaccharide and intact sheep erythrocytes through a mechanism different from that of the macrophage-derived stimulatory factor. In addition to their direct stimulatory effect on B-cell proliferation, lipopolysaccharide and sheep erythrocytes were each capable of modulating the production and/or release of B-cell stimulatory and inhibitory factors by the macrophage. Parallel studies of conventional mitogen- stimulated lymphocyte cultures did not show a requirement for macrophages and confirm that the semisolid assay is uniquely suited to studies on the regulatory role of the macrophage in B-cell activation.