Previously we described human cell line 2fTGH, in which expression of guanine phosphoribosyltransferase is tightly controlled by the upstream region of interferon (IFN)-stimulated human gene 6-16. After mutagenesis of 2fTGH and selection with 6-thioguanine and IFN-alpha, we isolated 11.1, a recessive mutant that does not respond to IFN-alpha. We now describe U2, a second recessive mutant, selected similarly, that complements 11.1. U2 had no response to IFN-alpha or IFN-beta, and its response to IFN-gamma was partially defective. Although many genes did respond to IFN-gamma in U2, the 9-27 gene did not and the antiviral response of U2 cells to IFN-gamma was greatly reduced. Band shift assays showed that none of the transcription factors normally induced in 2fTGH cells by IFN-alpha (E and M) or IFN-gamma (G) were induced in U2. However, extracts of untreated U2 cells gave rise to a novel band that was increased by treatment with IFN-gamma but not IFN-alpha. Band shift complementation assays revealed that untreated and IFN-gamma-treated U2 cells lack the functional E gamma subunit of transcription factor E and that IFN-alpha-treated U2 cells do contain the functional E alpha subunit.