Stromal cells play an important role in regulating early hematopoiesis. How stromal cells exert their different functions and the factors that regulate stromal cells themselves remain to be elucidated definitively, however. We describe here a limiting dilution assay for primary stroma colonies from murine marrow. This system permits a critical analysis of stromal cell function and regulation on the clonal level. We report that stroma formation was dependent on an activity secreted by the long-term cultured stromal line AC-3.U. Differential ultrafiltration of AC-3.U supernatant (SN) suggests that this potentially novel activity is represented by molecules with apparent molecular weights (m.w.) of > 100 < 300 kD and > 300 kD. In contrast to the AC-3.U activity, hydrocortisone (HC) acts as a negative regulator of stroma colony formation. We used the stroma colony assay to analyze potential stromal cell heterogeneity. We found that most, if not all, primary stromal colonies supported expansion of both myeloid and lymphoid cell lines. In contrast, long-term cultured stromal cell lines differed not only among lines, but also on the level of sublines, in their ability to sustain myeloid and lymphoid cells. This intraclonal variation suggests that the heterogeneity of cell lines can be a reflection of ongoing culture adaptation. The functional homogeneity of primary stromal colonies, together with their susceptibility to regulators, indicates that the performance of primary stroma is subject to external control. The establishment of a clonal assay system has paved the way to analyze the molecules that regulate primary stroma and thereby hematopoietic cells.