Three forms of interleukin-6 (IL-6) have been constructed and stably transfected into human hepatoma cells (HepG2). Wild type IL-6 containing a signal peptide was rapidly secreted as a biologically active protein. IL-6 lacking the signal peptide accumulated within the cytoplasm of transfected cells. Surprisingly, IL-6 carrying a COOH-terminal extension of the amino acids Lys-Asp-Glu-Leu (KDEL) was not completely retained in the endoplasmic reticulum (ER). Complete retention in the ER was achieved when the 14 COOH-terminal amino acids of protein disulfide isomerase which include the KDEL signal were added to the COOH terminus of IL-6. This finding clearly demonstrates that the addition of the protein sorting signal KDEL alone is not sufficient for full retention of IL-6 in the ER. IL-6 accumulated in the cytoplasm and IL-6 retained in the ER failed to induce liver-specific acute-phase protein synthesis in the host cells, indicating that there is no intracellular role for IL-6 in signal transduction. Retention of IL-6 in the ER led to the prevention of surface expression of the IL-6 receptor protein gp80, making these cells unresponsive to IL-6. This phenomenon can be exploited in the future to generate transgenic animals which will become completely cytokine unresponsive in the tissues in which they express an ER retained cytokine.