Arginase I is a marker of murine M2 macrophages and is highly expressed in many inflammatory diseases. The basis for high arginase I expression in macrophages in vivo is incompletely understood but likely reflects integrated responses to combinations of stimuli. Our objective was to elucidate mechanisms involved in modulating arginase I induction by IL-4, the prototypical activator of M2 macrophages. IL-4 and 8-bromo-cAMP individually induce arginase I, but together they rapidly and synergistically induce arginase I mRNA, protein, and promoter activity in murine macrophage cells. Arginase I induction by IL-4 requires binding of the transcription factors STAT6 and C/EBPβ to the IL-4 response element of the arginase I gene. Chromatin immunoprecipitation showed that the synergistic response involves binding of both transcription factors to the IL-4 response element at levels significantly greater than in response to IL-4 alone. The results suggest that C/EBPβ is a limiting factor for the level of STAT6 bound to the IL-4 response element. The enhanced binding in the synergistic response was not due to increased expression of either STAT6 or C/EBPβ but was correlated primarily with increased nuclear abundance of C/EBPβ. Our findings also suggest that induction of arginase I expression is stochastic; that is, differences in induction reflect differences in probability of transcriptional activation and not simply differences in rate of transcription. Results of the present study also may be useful for understanding mechanisms underlying regulated expression of other genes in macrophages and other myeloid-derived cells in health and disease.