Exposure of cultures of 3T3-L1 preadipose cells to nitrogen for 16 hours kills almost all of the cells, but after exposure to 5% oxygen for 16 hours most of the cells survive, and recover when culture is continued in 20% oxygen. The extent of recovery depends on the insulin concentration of the medium. Isotope incorporation and flow cytometry experiments show that exposure to 5% oxygen for 16 hours growth arrests the cells and leads to an elongation of the G1-phase of the cell cycle. When 3T3-L1 cells are growth arrested in the presence of 5% oxygen and allowed to recover in the presence of 5 microg/ml insulin under 20% oxygen, they can be induced to differentiate by treatment with carbacyclin during the period of growth arrest. Activity of the marker enzyme glycerol-3-phosphate dehydrogenase increases from 46.5+/-17 mU/mg protein to 1506+/-271 mU/mg protein. The extent of differentiation is exponentially related to the concentration of carbacyclin in the medium.