Tumor necrosis factor (TNF) is a monocyte-derived cytotoxin that has been implicated in tumor regression, septic shock, and cachexia. The mechanism by which TNF induces these different disease states is unclear. We have identified and characterized a novel, rapidly inducible cell surface cytotoxic integral transmembrane form of TNF. The existence and behavior of this novel form of TNF may explain the complex physiology of this molecule. We suggest that activated monocytes synthesize transmembrane TNF at the site of inflammation and kill their targets by either cell-to-cell contact or local release of the TNF secretory component. In contrast, septic shock and cachexia may result from either acute or chronic systemic activation of monocytes, resulting in the widespread release of TNF secretory component into the circulation of the affected individual. We further suggest that cell borne cytokines and cytotoxins may be the primary mediators of directed inflammatory responses.