The molecular mechanism(s) by which three cytokines (IFN-γ, TNF-α, TGF- β) affect class II MHC gene expression in primary rat microglia was examined. IFN-γ is a potent inducer of the class II gene, and this induction is unaffected by treatment with either TNF-α or TGF-β. Transient transfection of primary rat microglia with an HLA-DRA promoter linked to the chloramphenicol acetyltransferase reporter gene (DRA-CAT) demonstrated that IFN-γ acts at the transcriptional level to induce class II MHC gene expression, and that TNF-γ and TGF-β have no influence on IFN-γ-induced promoter activity. Experiments using a series of DRA substitution mutants that individually affect the W, X1, X2, or Y elements, as well as a double mutation in both X1 and X2, indicate that all four of these elements are required for responsiveness of the DRA promoter to IFN-γ. The effect of IFN- γ and TNF-α on DNA binding proteins by microglia was examined. A constitutive complex with specificity for the X2 box was detected in extracts from unstimulated microglia. IFN-γ treatment changed this complex to migrate with slower mobility, and TNF-α had no effect on either the constitutive or IFN-γ-induced complexes. These studies provide information on the molecular regulation of the class II MHC gene in microglia, a cell type critically involved in immune regulation within the central nervous system.