We have characterized the structure and expression of transcripts synthesized from the murine germline immunoglobulin gamma 3 heavy chain gene in certain B-lineage cells. The transcripts initiate upstream of the switch gamma 3 region, generating a 5' exon that is spliced to C gamma 3 exons. Expression of this germline transcript is induced when splenic B cells or A-MuLV-transformed pre-B cell lines are cultured in the presence of lipopolysaccharide (LPS). Addition of interleukin-4 (IL-4) to these lipopolysaccharide (LPS) cultures dramatically inhibits induction of the germline gamma 3 transcript. Induction of germline gamma 3 transcripts occurs before the increased accumulation of gamma 3-producing cells and VDJ-gamma 3 mRNA in cultures of splenic B cells. These data provide further evidence that germline CH transcriptional units are important components in the regulation of heavy chain class-switching. In addition, the pre-B cell lines that we describe represent the first example of permanent cell lines that regulate expression of the germline gamma locus in response to LPS plus IL-4 treatment in a manner analogous to normal B cells; therefore these lines should represent an excellent model system to further study the molecular mechanisms by which germline expression is regulated by these agents.