The molecular basis for the well known synergistic biological effects of tumor necrosis factor alpha (TNFalpha) and interferon gamma (IFNgamma) is still poorly understood. This report demonstrates that expression of interferon-regulatory factor 1 (IRF-1), also known as interferon-stimulated-gene factor 2 (ISGF-2), is synergistically induced by these cytokines. The induction is a primary transcriptional response that occurs rapidly without a requirement for new protein synthesis. Synergism is mediated by a novel composite element in the IRF-1 promoter that includes an IFNgamma-activation site (GAS) overlapped by a non-consensus site for nuclear factor kappa B (NFkappaB). These sequences are bound strongly by signal transducer and activator of transcription 1 (STAT-1) and weakly by the p50/p65 heterodimer form of NFkappaB, respectively. However, the binding of STAT-1 and NFkappaB to the GAS/kappaB element in vitro seems to be mutually exclusive and independent. Synergistic induction of IRF-1 is likely to be an important early step in regulatory networks critical to the synergism of TNFalpha and IFNgamma. The GAS/kappaB element may mediate synergistic transcriptional induction of IRF-1 by other pairs of ligands that together activate NFkappaB and STAT family members. Other genes are likely to contain this motif and be regulated similarly.