To address mechanisms by which cytokines inhibit interferon-gamma (IFN gamma)-induced gene expression in astrocytic cells, we have been studying effects of type beta 1 transforming growth factor (TGF beta 1) and interferon-beta (IFN beta) on IFN gamma-induced expression of the well-characterized human major histocompatibility complex (MHC) class II gene DRA. This investigation was motivated by the observations that IFN gamma-induced expression of MHC class II antigen expression on astrocytic cells can be blocked in a tissue-specific fashion by several cytokines and neurotransmitters in tissue culture and that astrocyte expression of MHC class II is severely restricted in vivo. We previously showed that IFN beta inhibited IFN gamma-induced DRA expression at the transcriptional level. This inhibition was not global, since IFN gamma-induction of intercellular adhesion molecule-1 was not affected. Here, TGF beta 1-mediated inhibition of DRA is shown to exhibit similar characteristics. To address the mechanism of this inhibition, sequence requirements for IFN beta and TGF beta 1 to suppress IFN gamma-induced transcription of DRA were determined. A 135-base pair DRA sequence element containing the IFN gamma-responsive region and transcriptional start site was sufficient to direct IFN beta- or TGF beta 1-mediated suppression of a reporter gene. These experiments suggested that either IFN beta or TGF beta 1 could repress IFN gamma-induced DRA transcription directly, without requiring a cis-element extrinsic to the IFN gamma-inducible DRA sequences. Consistently similar effects of IFN beta and TGF beta 1 observed in these experiments prompted comparison of other gene regulatory effects of the two cytokines. TGF beta 1, unlike IFN beta, induced gene expression directed by upstream elements of the gene encoding plasminogen activator inhibitor type-1. IFN beta, unlike TGF beta 1, enhanced levels of 2'-5'-oligoadenylate synthetase activity. Additionally, direct assay of TGF beta 1 and monoclonal anti-TGF beta antibody blocking experiments were used to determine that cells treated with IFN beta did not produce increased amounts of active or latent TGF beta. These data argued that IFN beta and TGF beta 1 utilized distinct pathways to mediate the inhibition of IFN gamma-induced DRA transcription.