The effect of bacillus Calmette‐Guerin (BCG) on the natural killer (NK) activity of peripheral blood lymphocytes (PBL) and the susceptibility of K562 cells to lysis by PBL in patients with urinary bladder tumors (UBT) was evaluated using a 4‐h51Cr release assay. The addition of BCG 0.1‐1mg/ml to the assay increased NK activity. In contrast, BCG at higher concentrations (10mg/ml) reduced NK activity. This effect of BCG was also observed in healthy donors. Pretreatment of PBL with BCG 0.1‐1mg/ml also resulted in increased NK activity, while higher concentrations of BCG depressed it. Treatment of K562 cells with BCG–10mg/ml for 3 hours reduced their susceptibility to lysis by PBL. Kinetic studies showed that the reduced susceptibility became apparent 3 hours after initiation of culture of K562 cells with BCG and lasted 12 hours. The susceptibility of BCG‐treated K562 cells to lysis by purified NK cells and lymphokine activated killer (LAK) cells was also reduced. Both live and dead BCG exerted an inhibitory effect on the target cells. The effector‐to‐target binding assay demonstrated that treatment with BCG reduced the number of PBL conjugates with K562 cells. These results indicate that BCG increases the NK activity of PBL, while rendering K562 cells resistant to PBL lysis by inhibiting the effector‐to‐target binding. BCG at lower concentrations (0.1‐1 mg/ml) may be useful in patients with UBT. The possible mechanisms responsible for the effects of BCG on K562 cells and their possible clinical impli