Tumor necrosis factor alpha (TNF-alpha) is initially synthesized as a type II integral membrane protein (transmembrane TNF-alpha) after macrophage activation. In this study we have investigated some aspects of the regulation of expression and biological activity of transmembrane TNF-alpha by both soluble TNF-alpha receptors (sTNF-alphaR) and inhibitors of TNF-alpha processing. We show, using the technique of receptor-mediated ligand precipitation (RMLP), that a dimeric construct of the type I sTNF-alphaR binds to transmembrane TNF-alpha, expressed on the mouse macrophage cell line RAW264.7, under cell culture conditions. This interaction between sTNF-alphaR and transmembrane TNF-alpha does not prevent processing and release of soluble TNF-alpha. A specific hydroxamic acid-based inhibitor of processing, BB1101 (British Biotech), was found to increase the total cellular levels of whole-cell, 26-kDa, precursor TNF-alpha by 2.2-fold. However, the inhibitor increased the levels of precursor TNF-alpha present solely on the cell surface (i.e., transmembrane TNF-alpha) by 5.1- to 7.5-fold. This increase in the levels of transmembrane TNF-alpha on the activated human monocytoid cell line mono mac 6 was associated with a similar (6.7-fold) increase in TNF-alpha-mediated cytotoxicity toward the human adenocarcinoma cell line Colo 205, which is sensitive only to the transmembrane form of TNF-alpha. Mono mac 6 cells, expressing transmembrane TNF-alpha, were found to be killing the Colo 205 target cells through apoptosis. This cytotoxicity could be neutralized by pre-incubating the mono mac 6 cells with either sTNF-alphaR or polyclonal anti-TNF-alpha serum.