We have constructed a mutant blocked in the biosynthesis of DIF-1, a chlorinated signal molecule proposed to induce differentiation of both major prestalk cell types formed during Dictyostelium development. Surprisingly, the mutant still forms slugs retaining one prestalk cell type, the pstA cells, and can form mature stalk cells. However, the other major prestalk cell type, the pstO cells, is missing. Normal pstO cell differentiation and their patterning in the slug are restored by development on a uniform concentration of DIF-1. We conclude that pstO and pstA cells are in fact induced by separate signals and that DIF-1 is the pstO inducer. Positional information, in the form of DIF-1 gradients, is evidently not required for pstO cell induction.