Prolonged incubation with interleukin-1 beta (IL-1) induced the release of large amounts of NO and subsequently inhibited DNA synthesis and the biosynthesis and accumulation of proteoglycans in cultured rabbit articular chondrocytes (RAC). IL-1 also inhibited DNA synthesis in bovine aortic endothelial cells (BAE). On the other hand, DNA synthesis in BAE cocultured with RAC was not inhibited by prolonged incubation with IL-1. Moreover, conditioned media from RAC incubated for a long period with IL-1 stimulated DNA synthesis in BAE alone. This growth stimulatory activity was mainly due to the release of basic fibroblast growth factor, a heparin-binding growth factor, into RAC culture. Gelatin zymography of the RAC culture medium revealed that IL-1 increased the production of matrix metalloproteinase-2 (MMP-2) and MMP-9. NG-Monomethyl-L-arginine, an inhibitor of NO synthesis, inhibited all of these actions of IL-1. These results indicate that NO from RAC treated with IL-1 stimulates MMPs, which, in turn, degrade the extracellular matrix produced by RAC, resulting in the release of large amounts of basic fibroblast growth factor stored in the matrix, which then stimulates adjacent BAE proliferation. Thus, NO produced from RAC treated with IL-1 may modulate angiogenesis in the synovium of arthritic patients.