Caffeic acid phenethyl ester (CAPE), which is derived from the propolis of honeybee hives, has been shown to reveal anti-inflammatory properties. Since T-cells play a key role in the onset of several inflammatory diseases, we have evaluated the immunosuppressive activity of CAPE in human T-cells, discovering that this phenolic compound is a potent inhibitor of early and late events in T-cell receptor-mediated T-cell activation. Moreover, we found that CAPE specifically inhibited both interleukin (IL)-2 gene transcription and IL-2 synthesis in stimulated T-cells. To further characterize the inhibitory mechanisms of CAPE at the transcriptional level, we examined the DNA binding and transcriptional activities of nuclear factor (NF)-kappaB, nuclear factor of activated cells (NFAT), and activator protein-1 (AP-1) transcription factors in Jurkat cells. We found that CAPE inhibited NF-kappaB-dependent transcriptional activity without affecting the degradation of the cytoplasmic NF-kappaB inhibitory protein, IkappaBalpha. However, both NF-kappaB binding to DNA and transcriptional activity of a Gal4-p65 hybrid protein were clearly prevented in CAPE-treated Jurkat cells. Moreover, CAPE inhibited both the DNA-binding and transcriptional activity of NFAT, a result that correlated with its ability to inhibit phorbol 12-myristate 13-acetate plus ionomycin-induced NFAT1 dephosphorylation. These findings provide new insights into the molecular mechanisms involved in the immunomodulatory and anti-inflammatory activities of this natural compound.