The role of natural killer (NK) cells in rheumatoid arthritis (RA) remains unclear. A pathogenetic function of rheumatoid factors (RF) also has not been defined. In the present studies, natural killer (NK) cells were examined as a model for FC gamma receptor type III-positive (FC gamma RIII+) cells, with regard to their interaction with RF. NK cell antigen CD16 (FC gamma RIII) and CD56 expression and functional NK and antibody-dependent cell-mediated cytotoxicity (ADCC) activity were compared in peripheral blood lymphocytes and autologous synovial fluid lymphocytes (SFL) of RA patients. Peripheral blood lymphocytes and SFL showed normal CD56 expression. In contrast, both the frequency and the density of CD16 antigen were decreased in SFL. Furthermore, diminished NK cytotoxicity and a significant decrease in ADCC were observed in SF NK cells. In subsequent in vitro studies with normal fresh NK cells, it was demonstrated that IgG-containing RF complexes from RA patients induced a modulation of FC gamma RIII structure from the NK cell surface, a decrease in NK activity, and a complete loss of ADCC. When purified RF was incubated with NK-enriched cell lines from RA patients, increased transcription and subsequent production of interferon-gamma and tumor necrosis factor alpha were observed. These data suggest a direct involvement of RF complexes in the pathogenetic process of chronic inflammation in RA.