Tumor necrosis factor-alpha (TNF) is a physiologically significant regulator of mammary gland development, stimulating growth and branching morphogenesis of mammary epithelial cells (MEC) and modulating functional differentiation. The present studies were performed to determine the mechanism by which TNF modulated functional differentiation. In rat MEC in primary culture, TNF inhibited accumulation of whey acidic protein and beta-casein messenger RNAs in a time- and concentration-dependent manner. In contrast, levels of transferrin messenger RNA, the product of another milk protein gene, were not inhibited by TNF, suggesting selectivity. Using a nuclear run-on assay in the immortalized HC11 mammary epithelial cell line and the transcriptional inhibitor actinomycin D in MEC in primary culture, the effects of TNF were shown to be mediated by both a decrease in transcription and a decrease in the stability of the whey acidic protein and beta-casein transcripts. Additionally, TNF stimulated the binding of nuclear factor-kappaB to a consensus kappaB-oligonucleotide, increased the stability of matrix metalloproteinase-9 (MMP-9) transcripts, and increased MMP-9 activity. Together, these data suggest that TNF may exert its effects on milk protein gene expression either directly via nuclear factor-kappaB modulation of transcription, or indirectly via MMP-9-induced remodeling of the architectural or hormonal environment surrounding the MEC.