ISG15 is secreted from monocytes in response to type I interferons and causes natural killer (NK)-cell proliferation and an augmentation of non-MCH (major histocompatibility complex)-restricted cytotoxicity. Synthesis is stimulated by IFN-alpha or IFN-beta or IFN-omega , but not IFN-gamma . ISG15 expression is also induced by overexpression of interferon regulatory factors that participate in transcriptional regulation of IFN genes, and by influenza B virus. ISG15 is secreted also by cell lines of monocyte, T-lymphocyte, B-lymphocyte, human fibroblasts, and epithelial origins. The induction of terminal differentiation in human melanoma cells is associated with alterations in ISG15 expression. Enhancement of NK cell proliferation, augmentation of non-major histocompatibility complex-restricted cytotoxicity, and induction of IFN-gamma from T cells identify ISG15 as a member of the cytokine cascade and suggest that it may be responsible for amplifying and directing some of the immunomodulatory effects of IFN-alpha or IFN-beta. ISG15 has has also been shown to function intracellularly as a ubiquitin homolog.