gamma-Interferon (IFN-gamma) is a well characterized lymphokine known to regulate many mononuclear phagocyte functions, including expression of class I and class II major histocompatibility complex genes. The second component of complement (C2) and factor B are major histocompatibility complex class III gene products synthesized in mononuclear phagocytes. Recombinant IFN-gamma increased the synthesis of C2 and factor B in primary cultures of human mononuclear phagocytes and in murine fibroblasts transfected with cosmid DNA bearing the human C2 and factor B genes. In both cell types the increases in C2 and factor B protein synthesis were detected at concentrations of IFN-gamma less than 1 unit/ml and the regulation of each was pretranslational. The IFN-gamma-induced increases in C2 and factor B mRNA did not require new protein synthesis. In primary cultures of human monocytes, the kinetics of induction of C2 and factor B synthesis differed, but in the transfected L-cells the kinetics were similar, suggesting differences in transduction of the IFN-gamma signal, transcriptional, and/or post-transcriptional events in the two cell types. The small size of the factor B 5' flanking region, which is bounded by the 3' terminus of the IFN-gamma-regulated C2 gene, provides a well defined region to probe the structural basis for IFN-gamma regulation of gene expression.