Regenerating optic nerves from fish produce a factor that is cytotoxic to oligodendrocytes. The cytotoxic factor is recognized by antibodies to interleukin-2 (IL-2) and has the apparent molecular size of a dimer of IL-2. An enzyme, identified as a nerve transglutaminase, was purified from regenerating optic nerves of fish and was found to catalyze dimerization of human IL-2. The dimerized IL-2, unlike monomeric IL-2, is cytotoxic to oligodendrocytes from rat brain in culture. The results suggest that posttranslational modification of a cytokine can alter its activity. Under conditions in which oligodendrocytes inhibit neuronal regeneration, dimerization of IL-2 might provide a mechanism to permit nerve growth.