A negatively acting transcription factor, negative regulatory element-A (NREA) that suppresses the transcription of interleukin 2 (IL-2) mRNA, has been described previously. We found that treatment of primary bovine lymphocytes with 12-O-tetradecanoyl phorbol-13-acetate (TPA), an activator of protein kinase C, for at least 18 h both increased the levels of the factor and blocked concanavalin A (Con A)-induced proliferation. In contrast, treatments of less than 18 h with TPA decreased NREA levels and increased Con A-induced proliferation. NREA binding activity also increased over basal levels during the first 4 h of stimulation of lymphocytes with Con A in the absence of TPA; after 4 h, NREA levels fell. Phosphorylation of the NREA protein was required for binding to its DNA consensus sequence. Furthermore, incubation of lymphocytes with okadaic acid (OKA), a phosphatase inhibitor, led to increased levels of NREA binding activity and to decreased cell proliferation. Because exposure of lymphocytes to either OKA or TPA should lead to an increase in the phosphorylation and binding of the NREA protein, and a decrease in IL-2 production, proliferation should be decreased. Incubation of lymphocytes with either TPA or OKA inhibited proliferation. However, the mechanisms of action of OKA and TPA appeared to be different because exogenous IL-2 reversed the inhibition of proliferation caused by TPA but not by OKA.