A hitherto unrecognized thyroid antibody, which reacts with a thyroid cell surface antigen expressed on passaged thyroid cells, was identified in serum from patients with thyroid-associated ophthalmopathy using antibody-dependent cell-mediated cytotoxicity (ADCC) tests. The antibody was detected in 14 of 23 patients with Graves' hyperthyroidism (Gh) and associated ophthalmopathy, in 3 of 4 patients with Hashimoto's thyroiditis (HT) and ophthalmopathy, but in only 1 of 16 patients with Gh without clinically evident eye disease and 4 of 37 patients with HT without eye disease. The ADCC test also was positive in 2 of 30 patients with thyroid cancer, both of whom had had Gh and ophthalmopathy in the past. There was no correlation, in patients with ophthalmopathy, between the levels of the antibody (expressed as percent specific lysis) and the titers of antithyroid microsomal antibody measured using a hemagglutination assay. Based on the results of blocking experiments using mouse monoclonal antibodies against human thyroid peroxidase, now known to be the thyroid microsomal antigen, the corresponding antigen was not thyroid peroxidase. Moreover, the new antigen was expressed on cultured and passaged thyroid cells which do not express the microsomal antigen. In patients with ophthalmopathy there was a close correlation between the degree of lysis of passaged thyroid cells and that of eye muscle cells, and ADCC activity against passaged thyroid cells was absorbed by preincubation of positive serum samples with eye muscle and thyroid cell, but not other cell, monolayers. The reaction of a newly identified cytotoxic thyroid antibody with a shared epitope on eye muscle cells thus appears to be a possible mechanism for the development of ophthalmopathy in patients with Gh and, less often, HT.