Transforming growth factor beta 1 (TGF-beta 1) is a multifunctional cytokine whose potent immunomodulatory activity is well documented. To explore the mechanisms of this activity we examined the effect of TGF-beta 1 on the production of IFN-gamma measured at the mRNA and protein levels in the YAC-1 T cell lymphoma. In previous studies, this model proved useful to characterize the mode of action of the immunosuppressant rapamycin (RAP). Here, we found that when induced by IL-1 or IL-1 + PMA, the production of IFN-gamma is suppressed by both TGF-beta 1 (ED50 = 1.9 pM) and RAP (ED50 = 0.2 nM). In contrast, when induced by the calcium ionophore ionomycin, in the absence or in the presence of PMA, this production is enhanced up to 10-fold by TGF-beta 1 (ED50 = 1.8 pM) and 1.5-3-fold by RAP. Therefore, in YAC-1 cells, TGF-beta 1 exerts opposite effects on IFN-gamma production depending on the mode of activation, and these effects parallel those of RAP. To further analyze the mode of action of TGF-beta 1 in this system, we used okadaic acid (OA), an inhibitor of serine/threonine protein phosphatases. Treatment with OA rendered the expression of IFN-gamma mRNA induced by IL-1 insensitive to TGF-beta 1 or RAP, indicating that activation of a phosphatase may play a role in the suppressive effect of both agents. However, OA did not prevent the augmentation of ionomycin-mediated induction of IFN-gamma mRNA by either TGF-beta 1 or RAP. Hence, the up-regulation of IFN-gamma production by TGF-beta 1 and RAP may involve a different biochemical mechanism than that mediating their suppressive action. These observations also favor the hypothesis that the two agents act on the same regulatory pathways. This was further supported by the finding that TGF-beta 1 and RAP modulate IFN-gamma production in an additive rather than synergistic fashion. However, their effects could be dissociated in mutants of YAC-1 cells selected for resistance to the inhibition of IL-1-mediated IFN-gamma induction by RAP. Moreover, the IFN-gamma modulatory action of RAP in YAC-1 cells was accompanied by an antiproliferative effect, whereas TGF-beta 1 failed to alter the growth of these cells. Therefore, the immunomodulatory action of TGF-beta 1 may result from the disruption of biochemical processes related to, although distinct from, those affected by RAP.