Cytokine effects on permanent cell lines of transformed mouse pancreatic α- and β-cells were compared. The β–tumor cell 1 (βTC1) line (from an adenoma created in transgenic mice expressing the SV40 large T-antigen oncogene under control of the rat insulin II promoter) produced insulin predominantly, although small quantities of intracellular glucagon (100:1 insulin to glucagon) were detectable by radioimmunoassay. The αTC1 line (from an adenoma created in transgenic mice expressing the SV40 large T-antigen oncogene under control of the rat preproglucagon promoter) produced not only glucagon but also considerable quantities of insulin (4:1 glucagon to insulin) and preproinsulin mRNA. We therefore cloned αTC1 cells and obtained 12 glucagon-producing clonai cell lines that did not produce levels of insulin detectable by radioimmunoassay. Analysis by Northern blotting of total RNA from two lines, αTC1 clones 6 and 9, confirmed the absence of preproinsulin mRNA. No somatostatin or pancreatic polypeptide was detected by immunohistochemical staining in αTC1 clones 6 or 9 or βTC1 cells. Rat recombinant γ-interferon (IFN-γ; 5–250 U/ml) or mouse recombinant interleukin 1 (IL-1; 1–25 U/ml) individually inhibited DNA synthesis in βTC1 cells after 3 days of treatment. The two cytokines in combination acted synergistically to further depress DNA synthesis and increase cytotoxicity. In contrast, αTC1 clone 9 cells were not sensitive to inhibition of DNA synthesis by each cytokine individually, although glucagon synthesis was inhibited. The combination of these cytokines caused marked inhibition of DNA and glucagon syntheses in αTC1 clone 9 cells. αTC1 clone 9 cells were somewhat more resistant to the cytotoxic action of the combined cytokines than were βTC1 cells. Incubation with 50 U/ml IFN-γ induced class II MHC molecules (I-A^b, I-A^d, and I-E^d) and enhanced the constitutive expression of class I molecules (H-2K^b and H-2K^d) on the cell surfaces of βTC1, uncloned αTC1, and αTC1 clones 6 and 9. Thus, these cell lines are heterozygous for MHC alleles derived from both parental strains used in the construction of the transgenic mice [C57BL/6J (H-2^b) and DBA/2J (H-2^d) ]. Class II gene transcription induced by IFN-γ was confirmed in βTC1 and αTC1 clone 9 cells by Northern blot analysis with Aα-, Aβ-, Eα-, and Eβ-DNA probes. The differences in sensitivity to the cytotoxic action of cytokines may relate to the preferential destruction of β-cells in the early stage of insulin-dependent diabetes. Because class I and II MHC expression was enhanced or induced by IFN-γ in both the α- and β-cell lines, the ability to induce MHC molecules in itself is not sufficient to explain β-cell– specific autoimmune recognition associated with insulin-dependent diabetes.