Ag administration into the portal vein can induce specific tolerance to that Ag, known as portal venous tolerance. Because intrahepatic mechanisms of tolerance induction are still largely undefined, we studied the in vitro response of OVA-sensitized Lewis rat lymphocytes to OVA presented by normal syngeneic rat Kupffer cells (KC) or KC that had been treated in vivo with gadolinium chloride (GD), a rare earth metal, which prevents the induction of portal venous tolerance. KC (2.5 x 10(4)) were able to present OVA to 5 x 10(5) OVA-sensitized APC-depleted lymphocytes as effectively as could lymph node APC. However, the use of GD-treated KC was associated with a significantly (P < 0.001) impaired response of OVA-sensitized APC-depleted lymphocytes to OVA. Although GD nearly abrogated in vivo phagocytosis of fluorescent latex beads by both KC and adherent splenocytes, expression of the class II MHC molecule (Ia) by KC was only slightly reduced by GD treatment. Unresponsiveness of OVA-sensitized lymphocytes to OVA was not related to enhanced PGE2 release by GD-treated KC, as determined both by PGE2 levels in culture supernatants and by cyclooxygenase inhibition. However, the marked ability of GD-treated KC to inhibit the response to OVA by primed lymph node populations containing lymphocytes and APCs supports an active suppressive mechanism. Prevention of the induction of portal venous tolerance by GD, the lack of in vitro KC Ag presentation by GD-treated KC, and active immunosuppression by GD-treated KC support a model of tolerance induction within the liver wherein Ag presentation and lymphocyte proliferation are necessary for the development of tolerance.