Surrogate light chain expression during B lineage differentiation was examined by using indicator fluorochrome-filled liposomes in an enhanced immunofluorescence assay. Pro-B cells bearing surrogate light chain components were found in mice, but not in humans. A limited subpopulation of relatively large pre-B cells in both species expressed pre-B cell receptors. These cells had reduced expression of the recombinase activating genes, RAG-1 and RAG-2. Their receptor-negative pre-B cell progeny were relatively small, expressed RAG-1 and RAG-2, and exhibited selective down-regulation of VpreB and λ5expression. Comparative analysis of the 2 pre-B cell subpopulations indicated that loss of the pre-B cell receptors from surrogate light chain gene silencing was linked with exit from the cell cycle and light chain gene rearrangement to achieve B-cell differentiation.