In the skin, wounding initiates a complex array of physiological processes mediated by growth factors and inflammatory mediators which stimulate tissue repair and protect against infection. We report that primary cultures of human keratinocytes and a mouse keratinocyte cell line respond to the inflammatory stimuli gamma-interferon and lipopolysaccharide or tumor necrosis factor-alpha by producing nitric oxide and hydrogen peroxide, two reactive mediators that are important in nonspecific host defense. Nitric oxide is produced by the l-arginine- and NADPH-dependent enzyme, nitric oxide synthase. In murine keratinocytes, optimal enzymatic activity was found to be dependent on Ca2+ and calmodulin as well as on glutathione. Inflammatory mediators were also found to inhibit the growth of keratinocytes, an effect that could be reversed by a nitric oxide synthase inhibitor. Epidermal growth factor (EGF), which promotes wound healing by stimulating cellular proliferation, was found to be a potent antagonist of reactive nitrogen and reactive oxygen intermediate production by keratinocytes. EGF also reversed the growth inhibitory actions of the inflammatory mediators. These data suggest that nitric oxide produced by keratinocytes is important in the control of cellular proliferation during wound healing. Our findings that EGF effectively regulates the production of free radicals by keratinocytes may represent an important pathway by which this growth factor not only stimulates epidermal cell proliferation but also facilitates the resolution of inflammation following wounding.