Since the tumor necrosis factor alpha (TNF-alpha) gene was found to be located in the central major histocompatibility complex (MHC) there has been much speculation concerning a genetic association between particular TNF alleles and disease susceptibility. A relationship between the MHC haplotype A1, B8, DR3, TNF-alpha expression levels and susceptibility to autoimmune disease has been suggested by several groups. The identification of the -308 polymorphism and its association with the HLA A1, B8, DR3 haplotype have led to speculation that the polymorphism may play a role in the altered expression of TNF-alpha. We have demonstrated that the region (-323 to -285) encompassing -308 in the TNF2 allele binds nuclear factors differently to the same region in the promoter of the more common TNF1 allele. The G/A -308 polymorphism affected the affinity of factor binding and resulted in a factor binding to TNF2 but not TNF1. The observed differential binding was shown to be functional, with the 38bp region from TNF2 causing a two-fold greater activity of a heterologous promoter over that due to the same region in TNF1. To further substantiate the functional consequences of the TNF-alpha -308 polymorphism, we analysed both allelic forms of the TNF-alpha promoter region (-993 to +110) in a transient transfection assay, using luciferase as a reporter gene. The results showed that when present with the 3'UTR the -308A allelic form gave a two-fold greater level of transcription than the 308G form in PMA-stimulated Jurkat and U937 cells. This suggests that the -308 G/A polymorphism may play a role in the altered TNF-alpha gene expression observed in individuals with the HLA A1, B8, DR3 haplotype.