Interferons (IFN) and retinoids failed to inhibit the growth of a number of breast tumor cell lines. However, a combination of these two biological response modifiers significantly suppressed the cell growth at pharmacologically achievable doses. The molecular basis for such enhancement was investigated in MCF-7, a breast tumor cell line resistant to growth inhibition by IFN-beta. Pretreatment of cells with retinoic acid (RA) for 16 h followed by IFN-beta, but not the converse, induced cytotoxic effects in the cells. Continuous presence of RA was not necessary, although it enhanced the degree of cell death when present. Further analyses revealed that IFN-beta failed to activate IFN-stimulated gene transcription. However, IFN-beta strongly up-regulated the gene expression in RA-pretreated cells. Both IFN-beta- and IFN-gamma-inducible gene expression were enhanced via a modulation of the transcriptional factor IFN-stimulated gene factors-3 and GAF binding to respective cognate regulatory elements. STAT1 was undetectable in these cells prior to RA treatment. RA increased the levels of this crucial regulator, thereby restoring IFN responses. Thus, RA augmentation of STAT1 may be an early step in the cooperative anti-tumor effects of IFN and RA.