Interferon-gamma (IFN-gamma) upregulates expression of certain genes in monocytes, including cell-surface molecules such as HLA class II, B7, and ICAM-1. IFN-gamma also potentiates production of cytokines such as tumor necrosis factor-alpha (TNF-alpha), interleukin-1beta (IL-1beta) and IL-12. Conversely, IL-10 downregulates expression of many of these same genes and often antagonizes the effects of IFN-gamma. IL-10 is known to inhibit TNF-alpha production in lipopolysaccharide (LPS)-stimulated monocytes; however, the effects of IL-10 on TNF receptor (TNF-R) expression are not well defined. We examined the effects of IL-10 on production of both membrane-associated (m) and soluble (s) TNF-R type II (sTNF-RII) by purified human CD14(+) monocytes. We also compared the effects of IFN-gamma and IL-10 on production of TNF-alpha and sTNF-RII by these cells. Monocytes constitutively expressed low levels of TNF-RII mRNA and mTNF-RII protein. LPS stimulation induced rapid, but transient loss (shedding) of mTNF-RII molecules and a delayed, but marked increase in TNF-RII mRNA levels. IL-10 increased expression of both mTNF-RII and sTNF-RII by LPS-stimulated monocytes, whereas IFN-gamma decreased their expression. The increased levels of sTNF-RII in cultures of IL-10-treated monocytes correlated directly with increased levels of TNF-RII mRNA and inversely with the levels of TNF-alpha mRNA. The ability of IL-10 to upregulate TNF-RII gene expression was transcriptionally mediated because actinomycin D blocked this effect. Furthermore, IL-10 treatment did not alter the half-life of TNF-RII mRNA transcripts in LPS-stimulated monocytes. To further examine the mechanism by which IL-10 potentiates TNF-RII gene expression, a 1.8-kb fragment of the human TNF-RII promoter cloned into a luciferase expression vector (pGL2-basic) was transfected into the IL-10-responsive macrophage cell line, RAW264.7. Although IL-10 alone induced only minimal promoter activity in these cells, it markedly increased the LPS-induced response, providing further evidence that the ability of IL-10 to amplify TNF-RII gene expression is transcriptionally controlled. Together, these findings demonstrate that IL-10 coordinately downregulates expression of TNF-alpha and upregulates expression of TNF-RII, particularly the soluble form of this receptor, in monocytes.