Interactions between CD23, the low-affinity receptor for IgE, and CD21, the C3d/EBV receptor, modulate several intracellular events in lymphocytes. A soluble form of CD21 (sCD21) corresponding to the extracellular domain of the receptor circulates in normal plasma. We now demonstrate that purified sCD21 acts as a functional ligand for CD23-expressing monocytes. Soluble CD21 induced an increase in intracellular cGMP levels and the production of IL-6 and TNF-alpha in IL-4-pretreated monocytes induced to express CD23 but not in unstimulated CD23- monocytes. The accumulation of cGMP and the production of TNF-alpha were inhibited by NG-monomethyl-L-arginine (L-NMMA), indicating that sCD21 activates the L-arginine pathway of NO production. We demonstrated that sCD21 activates NO synthase (NOS) since it was found to enhance the conversion of L-arginine into L-citrulline and induce the intracellular expression of inducible NOS in CD23+ monocytes. In addition, sCD21 was shown to up-regulate the expression of HLA-DR and CD40 and decrease that of CD14 on cultured CD23+ monocytes. Thus, in a fashion similar to IgE complexes, sCD21 is able to efficiently trigger CD23 signaling pathways, inducing the release of pro-inflammatory mediators by human monocytes. Soluble CD21 up-regulates the expression of molecules involved in antigen presentation, further suggesting a potential immunoregulatory function for the soluble molecule.