In addition to their role in peptide antigen presentation, class I MHC proteins also play a critical role in inhibiting natural killer (NK) cytotoxicity through interaction with NK inhibitory receptors. Thus, NK cells are cytotoxic to virus-infected and tumor cells that have lost class I MHC protein expression. However, the nature of the receptors involved in the triggering of lysis of target cells is poorly understood. CD16 (Fcgamma receptor III) has been described as a receptor expressed on NK cells that facilitates antibody-dependent cellular cytotoxicity (ADCC) by binding to the Fc portion of various antibodies. However, we show here that CD16 has a broader function and is directly involved in the lysis of some virus-infected cells and tumor cells, independent of antibody binding. The presence of a putative CD16 ligand on appropriate target cells has also been demonstrated by the use of a CD16-Ig fusion protein.