Tumor necrosis factor (TNF) plays an important role in chronic inflammatory disorders, such as Rheumatoid Arthritis and Crohn's disease. Recently, monoclonal Camelidae variable heavy-chain domain-only antibodies (V(H)H) were developed to antagonize the action of human TNF (hTNF). Here, we show that hTNF-V(H)H does not interfere with hTNF trimerization, but competes with hTNF for hTNF-receptor binding. Moreover, we describe posttranslational dimerization and multimerization of hTNF-V(H)H molecules in vitro catalyzed by microbial transglutaminases (MTG). The ribonuclease S-tag-peptide was shown to act as a peptidyl substrate in covalent protein cross-linking reactions catalyzed by MTG from Streptomyces mobaraensis. The S-tag sequence was C-terminally fused to the hTNF-V(H)H and the fusion protein was expressed and purified from Escherichia coli culture supernatants. hTNF-V(H)H-S-tag fusion proteins were efficiently dimerized and multimerized by MTG whereas hTNF-V(H)H was not susceptible to protein cross-linking. Cell cytotoxicity assays, using hTNF as apoptosis inducing cytokine, revealed that dimerized and multimerized hTNF-V(H)H proteins were much more active than the monomeric hTNF-V(H)H. We hypothesize that improved inhibition by dimeric and multimeric single chain hTNF-V(H)H proteins is caused by avidity effects.