The addition of human fibroblast interferon (IFN-beta) (100 units/ml) at the S/G2 boundary of the cell cycle of synchronously grown HeLa cells is characterized by the accumulation of newly synthesized low molecular weight DNA and changes in chromatin assembly. In addition, there is a 3-fold stimulation in the incorporation of tracer amounts of [3H]thymidine, but not [3H] deoxyguanosine, into DNA and a 2-fold increase in the incorporation of [3H]dTTP into the DNA of isolated nuclei. Fluorescence-activated cell sorting by laser flow cytometry revealed that IFN-beta-treated cells were delayed in entering and passing through the S phase. The inhibition of proliferation of HeLa cells treated with IFN-beta is characterized by a 3-fold accumulation of newly synthesized DNA of Mr less than 56 X 10(6) compared to untreated cells as determined by alkaline sucrose gradient centrifugation. The newly synthesized DNA in IFN-beta-treated cells was replicative and not repair DNA. The observation that IFN-beta inhibits the processing of newly synthesized low molecular weight DNA into normal DNA might be explained by the intracellular accumulation of S-adenosylhomocysteine in IFN-beta-treated HeLa cells (de Ferra, F., and Baglioni, C. (1983) J. Biol. Chem. 258, 2118-2121) which could change the soluble ribonucleotide and deoxyribonucleotide pool and ultimately affect DNA processing. Interferon may also affect processing of DNA by interfering with normal chromatin assembly. Evidence for the effect of IFN-beta on chromatin assembly is provided; we have observed a more condensed structure in IFN-beta treated cells by circular dichroism spectroscopy. Simultaneous with the affect on chromatin assembly, there is a 70% decrease in poly(ADP-ribosylation) of either histone and/or non-histone proteins. The loss of coordination between the pool size for DNA synthesis, decreased postsynthetic modifications of chromatin, and normal chromatin formation may explain the inability of the cell to differentiate and to continue cell division.