The nuclear factor of activated T cells (NFAT) enhancer element of the IL-2 gene can regulate expression of the Escherichia coli lacZ reporter gene in activated T cells. Based upon this observation, we showed that this inducible NFAT--lacZ construct could be used to measure TCR mediated, ligand-specific activation in single T cells. Here we describe a general approach to obtaining lacZ inducible, T cell hybrids by generating two new fusion partners BWZ.36 and BWZ.36 CD8 alpha derived by transfecting alpha-beta-BW5147 cells with the NFAT--lacZ construct. Using these fusion partners and normal T cells from immunized mice, we obtained T cell hybrids in which lacZ activity is specifically induced in response to antigen/MHC class II or MHC class I complexes. We show that measuring ligand induced T cell activation by the non-radioactive lacZ assay is simpler, faster, and most cost-effective relative to conventional IL-2 assays. Most importantly, the unique ability to detect activation of single T cells by the lacZ assays permits detection of rare antigen presenting cells and thus provides the basis for developing expression cloning strategies for identifying unknown T cell antigens.