Expression of aromatase P450 (P450arom; the product of the CYP19 gene) in human adipose stromal cells in primary culture is markedly stimulated by serum in the presence of dexamethasone (DEX). Under these conditions, the majority of P450arom transcripts contain untranslated exon 1.4 at their 5'-ends. Previously, we observed that the region of the CYP19 gene upstream of exon 1.4 contains a TATA-less promoter, a glucocorticoid response element, and an interferon-gamma-activating sequence. These act to mediate the action of interleukin-6 and related cytokines to stimulate aromatase expression in the presence of DEX. In the present study, we found that tumor necrosis factor-alpha (TNF alpha) also acts synergistically with DEX to stimulate aromatase expression in adipose stromal cells in serum-free medium. We observed that the action of TNF alpha can be mimicked by ceramide. Maximal aromatase activity was obtained when cells were incubated with 5 ng/ml TNF alpha or 100 nM ceramide in the presence of 250 nM DEX. Levels of c-fos and c-jun proteins also were increased by TNF alpha or ceramide in the presence of DEX. Upstream of the interferon-gamma-activating sequence site there is an imperfect activating protein-1 (AP-1) binding site (2-bp mismatch). Gel retardation analysis using nucleotide probes containing the putative AP-1-binding sequence and nuclear extracts of human adipose stromal cells cultured in the presence of TNF alpha or ceramide plus DEX revealed that adipose stromal cells nuclear proteins bind to this site and that binding was competed by a 100-fold excess of a consensus AP-1 sequence. In addition, binding activity was competed by both anti-c-fos and anti-c-jun sera. Mutation or deletion of the putative AP-1 element resulted in the loss of TNF alpha- plus DEX-induced activity of reporter constructs comprised of 515 bp of the exon 1.4 flanking sequence linked to the luciferase gene. These results suggest that TNF alpha, probably acting through ceramide formation, stimulates the binding of both c-fos and c-jun to the AP-1 element upstream of exon 1.4. These act cooperatively with the ligand-activated glucocorticoid receptor to induce aromatase expression in adipose stromal cells in primary culture. We conclude that this TNF alpha signal transduction pathway may play an important role in the regulation of estrogen biosynthesis in adipose tissue.