We have developed an expression/mutagenesis system and a series of screening procedures for the study of structure-function relationships in human interferon-gamma (HuIFN-gamma). Here we report a preliminary evaluation of the C-terminal portion of the molecule. An expression vector, p652trp gamma, was constructed which includes (i) the HuIFN-gamma gene under control of the trp promoter, (ii) elements controlling replication of both single- and double-stranded versions of the vector DNA; and (iii) the ampicillin resistance gene. (Other vectors using these same elements were constructed but proved to be unsatisfactory, being characterized by a rapid decline, as cells containing them were passaged, in their potential to achieve high expression levels.) A mutagenesis cassette was constructed by introduction of unique restriction sites flanking the nucleotides encoding the C-terminal 23 amino acids, and this cassette was replaced with chemically synthesized, degenerate oligonucleotides by ligation. Colonies from cells transformed with the reconstructed vector were stored in LB glycerol in microtiter plates, and these were screened by hybridization with synthetic oligonucleotides. Plates were grown in minimal medium to express the encoded interferon and lysed by an efficient, mild procedure. A polyclonal antibody specific for the C-terminal four amino acids of HuIFN-gamma was used to establish that the lysis procedure preserved the C-terminus, and to score for frame shift and nonsense mutations. Immunochemical assays also were used, with mixed results, to quantify IFN-gamma concentration in the lysate. An antiviral assay was employed to assess biological activity. Over 1000 isolates were screened and clones with properties representative of various classes of phenotypes were further characterized, in some cases after partial purification from the lysate. Three types of mutations were isolated: point mutations, nonsense mutations and frame shift mutations. The results from each type of mutation confirm earlier observations of the important role of basic residues in the 128-131 region of the molecule for biological activity. At the same time, the results suggest that most residues within the cassette can be altered without significant effects on biological activity. These results are discussed in the context of several possible mechanisms.