Extracellular polypeptides released by both N2-grown [peptide I] and NO3-grown [peptide II]Anabaena L-31 have molecular weight of approximately 3,500 but have distinctly different amino acid composition. Acid hydrolysis of the peptide I fraction (obtained by separation on Sephadex G-25) yielded ten amino acids whereas that from peptide II fraction yielded only 3 amino acids. On addition to a freshly inoculated N2-grown culture, the peptide I fraction stimulated pro-heterocyst and to a lesser extent heterocyst differentiation, whereas the peptide II fraction strongly inhibited differentiation. The inhibitory effect of polypeptide II fraction could not be relieved by methionine sulphoximine, which by itself enhances differentiation, but was greatly relieved by addition of the peptide I fraction. The data suggest but does not prove, thatAnabaena L-31 synthesises “inducer” or “inhibitor” peptides which could possibly control pattern formation.