The hypercalcemia of various granulomatoses is caused by endogenous 1,25-dihydroxyvitamin D [1,25-(OH)2D3] overproduction by disease-activated macrophages. The inability of 1,25(OH)2D3 to suppress its synthesis in macrophages contrasts with the tight control of its production in macrophage precursors, peripheral blood monocytes (PBM). We examined whether 1,25(OH)2D3 resistance develops as PBM differentiate to macrophages or with macrophage activation. Normal human pulmonary alveolar macrophages (PAM) are less sensitive to 1,25(OH)2D3 than PBM, despite similar vitamin D receptor content; however, both PBM and PAM respond to exogenous 1,25-(OH)2D3 by inhibiting 1,25(OH)2D3 synthesis and inducing 1,25(OH)2D3 degradation through enhancement of 24-hydroxylase mRNA levels and activity. The human monocytic cell line THP-1 mimics PAM in 1,25(OH)2D3 synthesis and sensitivity to exogenous 1,25(OH)2D3. We utilized THP-1 cells to examine the response to 1,25(OH)2D3 with macrophage activation. Activation of THP-1 cells with gamma-interferon (gamma-IFN) enhances 1,25(OH)2D3 synthesis 30-fold, blocks 1,25-(OH)2D3 suppression of its synthesis, and reduces by 42.2% 1,25-(OH)2D3 induction of its degradation. The antagonistic effects of gamma-IFN are not merely restricted to enzymatic activities. In THP-1 cells and in normal PBM, gamma-IFN inhibits 1,25-(OH)2D3 induction of 24-hydroxylase mRNA levels without reducing mRNA stability, suggesting gamma-IFN inhibition of 1,25(OH)2D3 transactivating function. These results explain 1,25(OH)2D3 overproduction in granulomatoses and demonstrate potent inhibition by gamma-IFN of 1,25(OH)2D3 action in immune cells.