Expression of the BY55 protein has been shown to be tightly associated with NK and CD8+ T lymphocytes with cytolytic effector activity. To determine the function of this protein, we molecularly cloned BY55 cDNA. The cDNA sequence predicts a cysteine-rich, glycosylphosphatidylinositol-anchored protein of 181 amino acids with a single Ig-like domain weakly homologous to killer inhibitory receptors. Reduction and carboxyamidomethylation of immunoprecipitated BY55 gave a band of 27 kDa, whereas reduction alone led to an 80-kDa species, suggesting that BY55 is a tightly disulfide-linked multimer. RNA blot analysis revealed BY55 mRNAs of 1.5 and 1.6 kb whose expression was highly restricted to NK and T cells. BY55 was expressed on the CD56dim, CD16+ subset of NK cells, which have high cytolytic activity, but was not expressed and was not induced on the CD56bright, CD16-subset of NK cells, a subset with high proliferative, but low cytolytic, capacity. In human tissues, BY55 mRNA was expressed only in spleen, PBL, and small intestine (in gut lymphocytes). BY55 was expressed on all intestinal intraepithelial lymphocytes, which were predominantly CD3+TCRalpha/beta+CD4-CD8+CD11b+CD28-CD45RO+C D56-CD101+CD103+ (alphaEbeta7 integrin). In addition, BY55 was expressed on most CD8+CD28- peripheral blood T cells. These phenotypic relationships suggest that CD8+CD28+ precursor CTL may terminally differentiate into CD8+CD28-BY55+ effector CTL and that some of the peripheral blood CD8+CD28- subset may represent recirculation from mucosal epithelial immune sites.