The possibility that glucocorticoids upregulate the expression of anti-inflammatory mediators is an exciting prospect for therapy in inflammatory diseases, because these molecules could give the therapeutic benefits of steroids without toxic side effects. Supernatants from monocytes and macrophages cultured in the presence of glucocorticoids increase the dispersion of neutrophils from a cell pellet in the capillary tube migration assay. This supernatant factor, unlike other neutrophil agonists, promotes dispersive locomotion of neutrophils at uniform concentration, lowers their adhesion to endothelial cells, inhibits their chemotactic response to fMLP and induces distinctive morphological changes. Here we show that thymosin beta4 sulfoxide is generated by monocytes in the presence of glucocorticoids and acts as a signal to inhibit an inflammatory response. In vitro, thymosin beta4 sulfoxide inhibited neutrophil chemotaxis, and in vivo, the oxidized peptide, but not the native form, was a potent inhibitor of carrageenin-induced edema in the mouse paw. Thymosin beta4 is unique, because oxidation attenuates its intracellular G-actin sequestering activity, but greatly enhances its extracellular signaling properties. This description of methionine oxidation conferring extracellular function on a cytosolic protein may have far-reaching implications for future strategies of anti-inflammatory therapy.