Tanapox virus (TPV) encodes and expresses a secreted TNF-binding protein, TPV-2L or gp38, that displays inhibitory properties against TNF from diverse mammalian species, including human, monkey, canine and rabbit. TPV-2L also has sequence similarity with the MHC-class I heavy chain and interacts differently with human TNF as compared to the known cellular TNF receptors or any of the known virus-encoded TNF receptor homologs derived from many poxviruses. In order to determine the TNF binding region in TPV-2L, various TPV-2L C-terminal truncations and internal deletions were created and the muteins were expressed using recombinant baculovirus vectors. C-terminal deletions from TPV-2L resulted in reduced binding affinity for human TNF and specific mutants of TNF that discriminate between TNF-R1 and TNF-R2. However, deletion of C-terminal 42 amino acid residues totally abolished the binding of human TNF and its mutants. Removal of any of the predicted internal domains resulted in a mutant TPV-2L protein incapable of binding to human TNF. Deletion of C-terminal residues also affected the ability of TPV-2L to block TNF-induced cellular cytotoxicity. In addition to TNF, TPV-2L can also form complexes with human beta2-microglobulin to form a novel macromolecular complex. In summary, the TPV-2L protein is a bona fide MHC-1 heavy chain family member that binds and inhibits human TNF in a fashion very distinct from other known poxvirus-encoded TNF inhibitors, and also can form a novel complex with the human MHC-1 light chain, beta2-microglobulin.