The present study demonstrates that neonatal human lymphocytes that are incapable of producing IgG and IgA antibodies may differentiate into IgE-secreting cells under the influence of IL4. Indeed, the addition of recombinant IL4 to cultures of unfractionated umbilical cord blood mononuclear cells (CBMC) induces a dose-dependent synthesis of IgE but not of the other classes of Ig. Moreover, IgE-secreting B lymphoblastoid cell lines can be derived from neonatal lymphocytes costimulated with EBV and IL4. Comparison of the mechanisms regulating the in vitro IgE synthesis by adult and neonatal lymphocytes indicates that in most cases IFN-gamma markedly potentiates the IgE synthesis in CBMC cultures whereas it has a reverse effect on adult lymphocytes. These reciprocal effects of IFN-gamma are specifically blocked by a neutralizing mAb to IFN-gamma; they are dose-dependent and they are observed when IFN-gamma is added at the initiation of the culture or shortly thereafter. Moreover, in a small number of cases IFN-gamma may also potentiate IgE synthesis by adult lymphocytes. The potentiation or the suppression of IgE synthesis by IFN-gamma is not explained by a differential effect of IFN-gamma on the production of soluble CD23 (sCD23); indeed in both cases IFN-gamma slightly increases the IL4-induced production of sCD23. Moreover, the spontaneous and the IL4-induced production of sCD23 by CBMC is comparable to that of adult lymphocytes. The IgE response is dependent upon the expression of Fc epsilon RII (CD23) inasmuch as it is specifically blocked by anti-CD23 mAb.