Cells infected with human immunodeficiency virus (HIV) induce antiviral activity in peripheral blood mononuclear cells (PBMC) from healthy donors. This activity is neutralized by anti-interferon-α antibody and partially destroyed at pH 2. Previous studies with enriched cell populations and monoclonal antibodies suggest that B lymphocytes are the main IFN-producing cells, and that both CD4 and HLA class II antigens are essential for IFN induction. Since the initial event of HIV infection of CD4+ cells is the interaction of the virus coat glycoprotein gp120 with CD4 molecule, we investigated whether gp120 is responsible for IFN induction. Using PBMC and recombinant gp120 obtained from a baculovirus expression system, dose-dependent induction of antiviral activity was observed with titers approaching 10³ IU/ml. This induction was blocked in the presence of antibody to gp120. The antiviral activity was characterized as IFN-α by neutralization with IFNα-specific antibody. Preincubation of PBMC with anti-CD4 or the presence of soluble CD4 during incubation inhibited IFN induction, indicating that interaction of gp120 with cell-associated CD4 is responsible for this induction. Neither lymphoproliferation nor interleukin-2 (IL-2) production was observed during IFN induction. However, class G immunoglobulin secretion was enhanced by gp120, indicating that B cells are direct or indirect targets of gp120 stimulation in this experimental system. Since gp120 is shed from HIV-infected cells and occurs in the serum of acquired immunodeficiency syndrome (AIDS) patients, our data suggest that this glycoprotein is responsible for the induction of endogenous IFN and the polyclonal activation of B cells both of which are observed in AIDS patients.