Two tumor necrosis factor (TNF) antagonists infliximab (a chimeric monoclonal antibody) and etanercept (a p75 TNF receptor/Fc fusion protein) have been approved for treatment of rheumatoid arthritis. However, these agents have shown different degrees of clinical benefit in controlled clinical trials in other TNF-mediated diseases such as Crohn's disease (CD) and psoriasis. We investigated whether structural differences between these two antagonists translate into different binding and functional characteristics. To study the binding of infliximab and etanercept to both the soluble and cell-surface transmembrane forms of TNF, a variety of in vitro binding and cell-based assays were performed. Binding assays using¹²⁵I-labeled TNF showed that infliximab binds to both monomer and trimer forms of soluble TNF (sTNF), whereas etanercept binding is restricted to the trimer form. Infliximab formed stable complexes with sTNF, whereas etanercept formed relatively unstable complexes, resulting in release of dissociated TNF. KYM-1D4 cell killing assays and human umbilical vein endothelial cell activation assays demonstrated that TNF that had dissociated from etanercept was bioactive. Infliximab also formed more stable complexes with the transmembrane form of TNF expressed on transfected cells relative to analogous complexes formed with etanercept. Additionally, more infliximab molecules bound to the transmembrane TNF with higher avidity than etanercept. Although both infliximab and etanercept inhibited transmembrane TNF-mediated activation of human endothelial cells, infliximab was significantly more effective. The differences between infliximab and etanercept in their TNF binding characteristics may help explain their differential efficacy in CD and psoriasis clinical trials.