Tumor necrosis factor (TNF) and lymphotoxin (LT) alpha are structurally and functionally related cytokines, We expressed the TNF and LT-alpha genes in murine fibrosarcoma L929r2 cells, which can be sensitized to TNF/LT-alpha-dependent necrosis by inhibitors of transcription or translation. Autocrine production of murine TNF in L929r2 cells completely downmodulated the expression of the 55- and 75-kD TNF receptors, resulting in resistance to TNF/LT-alpha cytotoxicity. Partial downmodulation of the 55-kD receptor was observed in human TNF-producing L929r2 cells, In contrast, an unaltered TNF receptor expression was found on LT-alpha L929r2 transfectants. Hence, although similar cytotoxic effects are induced by extracellularly administered TNF and LT-alpha, endogenous expression of these cytokines fundamentally differs in the way they modulate TNF receptor expression. Unlike LT-alpha, secreted by the classical pathway, TNF is first formed as a membrane-bound protein, which is responsible for receptor downmodulation, To explore whether the different pathways for secretion of TNF and LT-alpha explain this difference,we examined the effect of membrane-bound LT-alpha expression, This was obtained by exchange of the classical signal sequence of LT-alpha for the membrane anchor of chicken hepatic lectin, Membrane retention of LT-alpha resulted indeed in receptor downmodulation and TNF/LT-alpha resistance. We conclude that membrane retention of newly synthesized TNF or LT-alpha is absolutely required for receptor downmodulation and TNF/LT-alpha resistance.