The mouse anti-human CD3 monoclonal antibody OKT3 is a potent immunosuppressive agent used in clinical transplantation. However, OKT3 therapy is associated with unpleasant and often serious side effects which appear to result from cytokine release, complement activation and a human anti-mouse antibody (HAMA) response. To decrease these adverse side effects, we constructed antibody fragments comprising OKT3 variable domains without any constant domains. Single-chain Fv (scFv) monomers, dimers and trimers were generated by changing the linker length between the VH and VL domains. The linkers used were the natural extensions of the VH into the CH1 domain. The dimeric molecules (diabodies) demonstrated the best CD3-binding activity. The diabody with the six amino acid linker was produced in bacteria with a tenfold higher yield than other scFvs and possessed CD3-binding affinity approaching that of the parental mAb. In contrast to OKT3 mAb, the anti-CD3 diabody and scFv monomer did not cause any T-cell activation and cytokine release in vitro, while demonstrating CD3 modulation. In mixed lymphocyte cultures, both diabody and scFv, but not the monoclonal antibody OKT3, were able to suppress T-cell activation and secretion of IL-2 and IFN-γ in a dose-dependent manner. The anti-CD3 diabody may provide a potent immunosuppressive drug with low toxicity and immunogenicity.