We have examined the effect of T cell activation, with or without monocytes, on epithelial electrolyte transport and barrier functions. Confluent monolayers of human T84 epithelial cells were cocultured (1-3 days) with peripheral blood mononuclear cells (PBM) or T cells activated by anti-CD3 antibody. Monolayers were then mounted in Ussing chambers, and changes in ion transport (indicated by short-circuit current, Isc) and barrier (indicated by resistance and radiolabeled probe fluxes) functions were assessed. Coculture with activated PBM or conditioned medium from these cells altered the transport (decreased Isc responses to carbachol and forskolin) and barrier (decreased resistance and increased fluxes of [3H]mannitol and 51Cr-EDTA) properties of T84 monolayers. In contrast, coculture with equal numbers of T cells activated in the absence of monocytes did not significantly affect epithelial physiology. Monocytes treated with conditioned media from activated T cells evoked epithelial abnormalities similar to those caused by culture with activated PBM. Total correction of epithelial abnormalities was achieved only by treating T cell-conditioned medium with anti-interferon-gamma (IFN-gamma) before addition to monocytes, as well as addition of anti-tumor necrosis factor-alpha (TNF-alpha) to the coculture. Exogenous recombinant IFN-gamma and TNF-alpha added to T84 monolayers did not mimic the physiological changes induced by immune cells; addition of these cytokines to monocytes did reproduce the effects. We conclude that T cell-derived IFN-gamma activates monocytes to release TNF-alpha and other soluble mediators, resulting in epithelial dysfunction.