Pancreatic endocrine cells normally express only Class I gene products of the major histocompatibility complex (MHC). Recently it has been shown that in both patients with recent onset type I diabetes and acutely diabetic BB rats, residual islet beta cells express Class II MHC antigens. In an attempt to define a potential inducer of this aberrant Class II antigen expression, we have investigated the effect of in vitro incubation of rat isolated pancreatic islets with the lymphokine gamma interferon (IFN-gamma) on MHC antigen expression. Our results demonstrate that in vitro exposure to IFN-gamma induces novel expression of Class II antigens on the surface of rat islet endocrine cells and increases the level of pre-existing Class I antigen expression.