Interferon tau (IFN tau), originally identified as a pregnancy recognition hormone, is a type I interferon that is related to the various IFN alpha species (IFN alpha s). Ovine IFN tau has antiviral activity similar to that of human IFN alpha A on the Madin-Darby bovine kidney (MDBK) cell line and is equally effective in inhibiting cell proliferation. In this study, IFN tau was found to differ from IFN alpha A in that is was > 30-fold less toxic to MDBK cells at high concentrations. Excess IFN tau did not block the cytotoxicity of IFN alpha A on MDBK cells, suggesting that these two type I IFNs recognize the type I IFN receptor differently on these cells. In direct binding studies, 125I-IFN tau had a Kd of 3.90 x 10(-10) M for receptor on MDBK cells, whereas that of 125I-IFN alpha A was 4.45 x 10(-11) M. Consistent with the higher binding affinity, IFN alpha A was severalfold more effective than IFN tau in competitive binding against 125I-IFN tau to receptor on MDBK cells. Paradoxically, the two IFNs had similar specific antiviral activities on MDBK cells. However, maximal IFN antiviral activity required only fractional occupancy of receptors, whereas toxicity was associated with maximal receptor occupancy. Hence, IFN alpha A, with the higher binding affinity, was more toxic than IFN tau. The IFNs were similar in inducing the specific phosphorylation of the type I receptor-associated tyrosine kinase Tyk2, and the transcription factors Stat1 alpha and Stat2, suggesting that phosphorylation of these signal transduction proteins is not involved in the cellular toxicity associated with type I IFNs. Experiments using synthetic peptides suggest that differences in the interaction at the N terminal of IFN tau and IFN alpha with the type I receptor complex contribute significantly to differences in high-affinity equilibrium binding of these molecules. It is postulated that such a differential recognition of the receptor is responsible for the similar antiviral but different cytotoxic effects of these IFNs. Moreover, these data imply that receptors are "spare'' with respect to certain biological properties, and we speculate that IFNs may induce a concentration-dependent selective association of receptor subunits.