We have generated and examined transgenic mice carrying a rearranged immunoglobulin transgene coding for the heavy chain of an IgE antibody. These mice produce the secreted form of the recombinant epsilon heavy chain. Serum IgE levels were increased at least 100-fold over control values. Transgenic epsilon mRNA was detected in spleen and thymus, not in liver and heart. Transgenic epsilon production in vitro was slightly up-regulated by T cells, but not affected by interleukin 4 in vitro or Nippostrongylus infestation in vivo. The B cell and T cell compartments and antigen-specific IgE, IgG1 and IgM responses as well as the increase in endogenous IgE after Nippostrongylus infestation in transgenic mice were normal. These data indicate that the presence of high levels of transgenic IgE did not induce class-specific suppressive mechanisms. Transgenic IgE bound to Fc epsilon receptor type I and Fc epsilon receptor type II and mediated histamine release from mast cells in vitro and an allergic skin reaction in vivo. It inhibited an ovalbumin-specific skin reaction in ovalbumin-immunized transgenic mice only during the initial phases of the immune response. This result has a bearing on the feasibility of immune therapy of allergic diseases with substances that block binding of IgE to its receptors.