B lymphocytes expressing CD5 (CD5+B cells) and T lymphocytes using the gamma and delta chains to form their antigen receptor (gamma delta +T cells) are major populations in developing fetuses, but become relatively minor in normal adults. However, both subsets are expanded in the peripheral blood of more than 50% of patients with rheumatoid arthritis and primary Sjögren's syndrome. We have examined the surface phenotype of these subsets using flow cytometry and have studied the frequency of IgM-producing lines after EBV-transformation of sorted CD5+B and CD5-B cells isolated from neonatal umbilical vein and RA peripheral blood. The intensity of CD5 expression on B cells was at least 10 times 'duller' than on T cells, CD5 'dull' cells were CD3 negative, and T cells bearing the gamma delta antigen receptor did not express either CD4 or CD8 on their surface. In vitro stimulation by Staphylococcus aureus Cowan I or transformation by Epstein-Barr virus of CD5+B cells resulted in loss of CD5 antigen from the surface of B cells. EBV-transformation of sorted CD5+B and CD5-B lymphocytes from neonatal blood gave rise to IgM-secretion in 100% of the Ig-secreting lines. CD5+B fraction isolated from RA blood also generated 100% IgM-secreting lines, whereas 29% of the Ig-secreting lines obtained from RA CD5-B fraction did not secrete IgM. The function of these 'fetal-type' T and B lymphocytes is unknown, however their expansion in rheumatoid arthritis and primary Sjögren's Syndrome suggests that they may play a role in autoimmune diseases.