Fas ligand (FasL), an apoptosis-inducing member of the TNF cytokine family, and its receptor Fas are critical for the shutdown of chronic immune responses and prevention of autoimmunity. Accordingly, mutations in their genes cause severe lymphadenopathy and autoimmune disease in mice and humans. FasL function is regulated by deposition in the plasma membrane and metalloprotease-mediated shedding. Here we generated gene-targeted mice that selectively lack either secreted FasL (sFasL) or membrane-bound FasL (mFasL) to resolve which of these forms is required for cell killing and to explore their hypothesized non-apoptotic activities. Mice lacking sFasL (FasL(Deltas/Deltas)) appeared normal and their T cells readily killed target cells, whereas T cells lacking mFasL (FasL(Deltam/Deltam)) could not kill cells through Fas activation. FasL(Deltam/Deltam) mice developed lymphadenopathy and hyper-gammaglobulinaemia, similar to FasL(gld/gld) mice, which express a mutant form of FasL that cannot bind Fas, but surprisingly, FasL(Deltam/Deltam) mice (on a C57BL/6 background) succumbed to systemic lupus erythematosus (SLE)-like autoimmune kidney destruction and histiocytic sarcoma, diseases that occur only rarely and much later in FasL(gld/gld) mice. These results demonstrate that mFasL is essential for cytotoxic activity and constitutes the guardian against lymphadenopathy, autoimmunity and cancer, whereas excess sFasL appears to promote autoimmunity and tumorigenesis through non-apoptotic activities.