A human erythroleukemic cell line, metabolically blocked in a late stage of erythropoiesis, becomes capable of differentiation along the normal pathway when grown in the presence of hemin. This process is characterized by hemoglobin synthesis followed by rearrangement of the plasma membrane proteins and culminates in asymmetrical cytokinesis in the absence of nuclear division. A reticulocyte-like cell buds from the nucleus-containing parent cell after erythrocyte specific membrane proteins have been sequestered into its membrane. In this process the parent cell faces two obstacles. First, to organize its erythrocyte specific proteins at one pole of the cell for inclusion in the reticulocyte; second, to reduce or abolish membrane protein turnover since hemoglobin is virtually the only protein being synthesized at this stage. A means of achieving redistribution and cessation of turnover could involve movement of membrane proteins by a directional lipid flow. Generation of a lipid flow towards one pole and accumulation of erythrocyte-specific membrane proteins could be achieved by clathrin coated pits which are implicated in membrane endocytosis, intracellular transport and turnover. In non-differentiating cells, membrane proteins are turned over and are random in surface distribution. If, however, the erythrocyte specific proteins in differentiating cells were excluded from endocytosing coated pits, not only would their turnover cease, but they would also tend to drift towards and collect at the site of endocytosis. This hypothesis requires that different protein species are endocytosed by the coated vesicles in non-differentiating than by differentiating cells.