Two reproducible and sensitive assays have been developed for the detection of cell-free HLA-DR antigen, an antibody-mediated complement-dependent cytotoxicity inhibition assay (CIA) and a competition enzyme-linked immunosorbent assay (CELISA). One unit of cell-free HLA-DR antigen has been quantitated to be the equivalent of 27.5 ng pure DR antigen/ml. Human peripheral blood adherent mononuclear cells (PBAMC), as well as DR+ monocytes and B lymphoblastoid cell lines but not T lymphocytes, were observed to shed DR-bearing vesicles in vitro. Human recombinant IFN-gamma induces the expression of Ia/DR antigen by PBAMC by increasing both the number of cells expressing DR antigen and the density per cell. After incubation with IFN-gamma, PBAMC also shed significantly more DR antigen. The degree of DR expression and shedding is dependent on the dose of IFN-gamma. The shedding of DR antigen occurred concomitantly with the inductive phase of cell membrane antigen expression, and very little DR antigen appeared in culture supernatants subsequent to the removal of IFN-gamma. The possible physiologic significance of shed DR antigen is discussed.