IgE-binding factors (soluble CD23) are generally considered to have an Mr of 25,000-27,000. The present study first indicates that IgE-BFs with an Mr of 33,000 or 37,000 may also be produced by Fc epsilon R II bearing B cells, depending upon the culture conditions and the nature of the Fc epsilon R II bearing cells. Extending our previous observations that the Mr 25,000-27,000 IgE-BFs are derived from the cleavage of soluble Mr 37,000 precursors, we show here that this cleavage is specifically inhibited by iodoacetamide but not by several other protease inhibitors. The proteolytic enzyme involved in the cleavage of Mr 33,000-37,000 precursors into Mr 25,000-27,000 IgE-BFs is cell-associated and is specifically expressed on Fc epsilon R II bearing cells. As expected, these Mr 33,000 and 37,000 fragments of Fc epsilon R II are capable of binding to IgE. The site at which these molecules are cleaved from Fc epsilon R II was located by determining their amino-terminal sequence. The Mr 37,000 IgE-BFs start at position 81 (glutamine) and the Mr 33,000 IgE-BFs start at position 102 (leucine) of the Fc epsilon R II sequence. Taken collectively, the present study not only contributes to our understanding of the mechanisms of formation of IgE-BFs, but also provides a means to prepare different molecular forms of IgE-BFs which may display different biological activity.