We show that human glioblastoma cells, moving from exponential growth into a state of density-dependent growth arrest, demonstrate a 7-fold drop in the total number of alpha-IFN-receptors expressed per cell. This loss of receptor activity was not seen when cells were grown in the presence of anti-alpha-IFN-monoclonal antibody. The active binding sites expressed on the arrested cell population were of reduced affinity for IFN, relative to the high-affinity sites expressed on the growing cells, resulting in a 3-fold lower initial rate of IFN-binding to the arrested cells. We exploited this difference to investigate the relationship between IFN receptor binding and induced gene transcription. As determined by nuclear run-off assays, the transcriptional response of both the gene family 1-8 and 2-5A synthetase to IFN treatment also showed a 3-fold reduction in density-arrested cells. Longer-term (0-8 h) induction and down-regulation of gene transcription in IFN-treated cells closely followed the binding to, and down-regulation of, cell surface-localized IFN receptors. Furthermore, inhibition of the intracellular breakdown of IFN did not affect transcriptional responses to IFN. Thus transcription of these IFN-induced genes is closely linked to surface receptor occupancy and is most likely mediated by transmembrane signals alone.