It is becoming increasingly apparent that many of the genes in the class III region of the human MHC encode proteins involved in the immune and inflammatory responses. Furthermore, genetic studies have indicated that genes within the class III region, particularly the telomeric segment containing the TNF gene, could contribute to susceptibility to diseases of immune-related etiology. We have sequenced an 82-kb segment of DNA around the TNF gene to identify candidate disease susceptibility genes in this region. The 10 known genes in this region have been precisely positioned with the order allograft inflammatory factor 1, G1, 1C7, leukocyte-specific transcript 1 (B144), lymphotoxin B, TNF, lymphotoxin A, NB6, IKBL, BAT1 (centromere to telomere), and their genomic structures have been defined. Comparison of the G1 genomic region with previously described cDNA and genomic sequences, together with the results of reverse transcriptase-PCR, indicates that three alternative transcripts, G1, allograft inflammatory factor 1, and IFN-gamma-responsive transcript, are all derived from this gene. The completion of the sequence of 1C7 (D6S2570) has revealed that this gene encodes a putative novel member of the Ig superfamily. A number of alternatively spliced transcripts of 1C7 were identified by reverse transcriptase-PCR, all of which are expressed in immune-related cell lines. Alternative splicing within the Ig domain-encoding region was seen to result in possible set switching between an IgV domain and an IgC2 domain. Lastly, a previously unidentified gene, homologous to a number of V-ATPase G subunits, has been located 1 kb telomeric of IKBL.