Multinucleated giant cells (MGCs) are an integral part of the host immune response to infectious disease and are seen in granulomas induced by pathogens and inorganic substances. We have developed a novel system for the production and study of MGCs: Peripheral blood monocytes, when cultured in the presence of anti-class II major histocompatibility complex monoclonal antibodies (MHC mAb's) and lymphocyte-conditioned medium form MGCs within 48 h. MGC formation was strictly dependent on the presence of anti-class II MHC mAb's and lymphocyte-conditioned medium. MGC formation was not induced by mAb's to other monocyte surface proteins. None of the previously identified macrophage fusion factors (calcitriol, interleukin 4, interferon-gamma) were able to substitute for the lymphocyte-conditioned medium in our assay; however, the conditioned medium could be replaced by the phorbol ester phorbol 12-myristate 13-acetate. We have also demonstrated that the induction of MGCs by anti-class II MHC antibody and phorbol ester requires protein kinase C activity, because MGC formation was totally inhibited by the protein kinase C inhibitors staurosporine and H-7. In analyzing the signal induced by anti-class II MHC mAb's we have demonstrated that cross-linking of the class II MHC antigens with intact mAb's, or with F(ab')2 fragments of anti-class II MHC mAb's and F(ab')2 fragments of rabbit antimouse (RAM) immunoglobulin G, produced an intracellular calcium rise. Furthermore, using the calcium channel blocker verapamil, it was demonstrated that calcium channel activity is necessary for MGC formation. These data support the view that MGC formation is a tightly regulated differentiative pathway of peripheral blood monocytes that is dependent on protein kinase C second messenger systems and involves an increase in intracellular calcium concentration.