Transforming growth factor-beta (TGF-beta) is known phenomenologically as a negative regulator of several functions of mouse bone marrow macrophages. The studies reported here extend this list by showing that TGF-beta can suppress cytolytic activity of mouse bone marrow culture-derived macrophages that already have become activated by IFN-gamma and LPS for tumor cell killing, as well as confirm that this cytokine can interfere with the induction of activation. Suppression was caused by a shift in the dose response curve for IFN-gamma rather than absolute inhibition; the 50% effective dose for IFN-gamma was increased approximately fourfold by treatment with TGF-beta. TGF-beta also decreased the absolute number of IFN-gamma R on the surfaces of pretreated macrophages by approximately 30 to 35%, without altering the affinity with which IFN-gamma bound. The increased concentration of IFN-gamma needed to produce the higher level of receptor occupancy explained the observed shift in the IFN-gamma dose response curve. These results suggest that TGF-beta mediates its negative regulatory effects on macrophage activation by interfering with coupling of the IFN-gamma R to the pathways that induce and maintain macrophage activation for tumor cell killing. Such effects are consistent with the view that TGF-beta is a negative regulator of macrophage activation for tumor cell killing. Because of this fact, neoplastic cells that secrete this cytokine may have a distinct survival advantage.