We analyzed whether normal human hepatocytes, which normally do not display Class II major histocompatibility complex antigens, can be induced to express them in vitro, and whether this induction has an in vivo counterpart in chronic liver diseases. While both alpha- and gamma-interferon induced expression of Class I antigens, only gamma-interferon induced expression of Class II antigens on hepatocytes in vitro. Recombinant interleukin 2 had no effect on major histocompatibility complex antigen expression. Both Class I and Class II antigens could be detected by indirect immunofluorescence on hepatocytes from patients with various forms of chronic liver disease, regardless of etiology. These findings suggest that gamma-interferon produced by T lymphocytes that infiltrate the liver during the course of chronic hepatitis induces Class II major histocompatibility complex antigen expression and may endow the hepatocytes with the capacity to perform accessory (antigen-presenting) cell functions.