The myxoma virus T2 (M-T2) gene expresses a secreted protein that contains significant sequence similarity to the ligand binding domains of the cellular tumor necrosis factor (TNF) receptors, specifically inhibits the cytolytic activity of rabbit TNFalpha and is an important virulence factor for myxoma virus infection in rabbits. M-T2 protein was overexpressed from vaccinia virus vectors, purified to apparent homogeneity, and found to specifically protect mouse and rabbit cells from lysis by rabbit TNFalpha at molar ratios comparable with the soluble versions of the host tumor necrosis factor receptors. M-T2 secreted from virus-infected cells is detected as both a monomer and a disulfide-linked dimer, both of which were shown by Scatchard analysis to bind rabbit TNFalpha (Kd values of 170 pM and 195 pM, respectively), values that are comparable with the affinities of mammalian TNFs with their receptors. In contrast to the rabbit ligand, M-T2 interacts with mouse TNFalpha with a much lower affinity, Kd of 1.7 nM, and was unable to inhibit the cytolytic activity of this ligand on mouse cells. Although both monomeric and dimeric forms bound rabbit TNFalpha with comparable affinity, the dimeric M-T2 protein was a far more potent inhibitor of rabbit TNFalpha, presumably because it can more effectively prevent dimerization of TNF receptors than can the M-T2 monomer.