We have isolated cDNA clones complementary to a truncated immunoglobulin heavy-chain C epsilon RNA transcript previously found to be induced in B lymphoid cells by treatment with lipopolysaccharide (LPS) combined with interleukin-4 (IL-4). We demonstrate that this transcript initiates from a promoter upstream of the germ line epsilon class-switch recombination region (S epsilon region). The major germ line C epsilon transcript contains a small 5' exon contributed by sequences upstream of the S epsilon region spliced to the normal C epsilon exons. Treatment of splenic B lymphoid cells with LPS plus IL-4 induces the expression of transcripts from the germ line epsilon transcription unit followed by expression of normal immunoglobulin epsilon heavy-chain mRNA. Furthermore, we demonstrate that similar treatment of transformed precursor B cell lines induces the expression of germ line epsilon transcripts followed by class switching to epsilon expression in these lines. This is the first demonstration of switching to epsilon in cells of the pre-B stage. The general structure of the germ line epsilon transcript and transcription unit is similar to that previously characterized for germ line gamma 2b transcripts. However, expression of these two germ line transcription units in B-lineage cells is inversely regulated by IL-4 (plus LPS) treatment, correlating with the effects of these treatments on switching to these loci.