Persisting (P) cells (murine cells that resemble mast cells and grow continuously in vitro for prolonged periods in the presence of a specific growth factor) did not express detectable levels of Ia antigens (murine class II major histocompatibility antigens) when their growth was supported by partially purified P cell-stimulating factor. However, when these Ia-negative P cells were transferred to medium conditioned by concanavalin A-stimulated spleen cells, Ia antigens appeared within 24 hr. The increase in Ia antigens was due to induction of synthesis of Ia antigens by P cells and not to absorption of Ia antigens from the conditioned medium or selective growth of Ia-positive cells from a low number of Ia-positive cells in the original population. The Ia-inducing activity was also found in supernatants from antigen-stimulated cloned T-cell lines, but not from certain T-cell hybridomas or the T lymphoma EL-4. The presence of Ia-inducing activity correlated with the presence of interferon-gamma (IFN-gamma). The gel filtration profiles of IFN-gamma activity and Ia-inducing activity were coincident and corresponded to an apparent molecular weight of 40,000-45,000. Both the IFN-gamma and Ia-inducing activity were destroyed by treatment at pH 2. These results indicate that IFN-gamma or a closely related molecule induces Ia antigens on P cells and suggest that regulation of Ia antigen expression may be an important aspect of the effects of IFN-gamma on the immune and hemopoietic systems.