Allograft rejection remains the single largest impediment to success in the field of transplantation. While OKT3 therapy has proven to be a significant advancement, many grafts are still lost. Late treatment, subtherapeutic OKT3 levels, anti-OKT3 antibodies, and OKT3-induced class II antigen expression are possible explanations. To determine the mechanism of OKT3 resistant rejection we propagated and characterized infiltrating T cells from the biopsy of a liver transplant patient who was rejecting while on prophylactic OKT3. The T lymphocytes demonstrated allospecific proliferation and interleukin 2 (IL2) production and showed a high degree of cytolysis of donor splenocytes. CD3 epsilon monoclonal antibodies (Mab) in concentrations up to 100 micrograms/ml did not inhibit lysis. In contrast, T lymphocytes derived from rejecting allografts of patients receiving cyclosporine and prednisone were readily inhibited from killing by CD3 epsilon Mab at doses of 1 microgram/ml. Furthermore, allospecific proliferation and IL2 production were not inhibited in the OKT3-treated patient by the addition of CD3 epsilon MaB. Incomplete modulation of the CD3-TCR complex was noted after a 72-hr incubation with CD3 epsilon Mab. The T cells did demonstrate other intact CD3-mediated functions such as a rise in intracellular calcium and CD3-dependent cytotoxicity. These results should alert clinicians that CD3 resistant cytotoxic T cells can emerge during OKT3 therapy and may cause rejection. Immunotherapy that targets additional cell surface structures may be of benefit.