The molecule CD23, a low-affinity receptor for IgE (Fc epsilon R2), is a type II transmembrane molecule expressed on many haemopoietic cell types. CD23 has pleiotropic roles in the control of lymphocyte behaviour, suggesting that CD23 may interact with another ligand in addition to IgE. To identify such a CD23 ligand, we expressed and purified full-length recombinant CD23, incorporated it into fluorescent liposomes and used these as a probe. We report here that fluorescent liposomes carrying CD23 interact specifically with the cell-surface protein CD21, identified as the receptor for Epstein-Barr virus and the complement receptor-2 on B cells, some T cells and follicular dendritic cells. In addition, fluorescent CD23-liposomes were shown to bind to hamster kidney cells (BHK-21) transfected with CD21 complementary DNA. The interaction between fluorescent CD23-liposomes and B cells or CD21-transfected BHK-21 cells was specifically inhibited by anti-CD21 and anti-CD23 monoclonal antibodies. Western blotting analysis revealed that 14C-labelled liposomes carrying CD23, in contrast to anti-CD21 antibodies, reacted with a subtype of CD21 molecules. Triggering of CD21 either with an anti-CD21 antibody or with recombinant soluble CD23 was shown to increase specifically interleukin-4-induced IgE production from blood mononuclear cells. These results demonstrate that the cell-surface protein CD21 is a ligand for CD23 and that the pairing of these molecules may participate in the control of IgE production.