The mechanisms involved in negative regulation of IFN-gamma-induced IP-10 mRNA expression by IL-4 have been examined in an immortalized murine macrophage cell line (ANA-1). As in primary peritoneal macrophages, IL-4 selectively inhibits the production of IP-10 mRNA by IFN-gamma-treated ANA-1 cells. Expression of another IFN-gamma-inducible gene (D3) was not affected by co-treatment with IL-4. Suppression of IFN-gamma-induced IP-10 mRNA expression by IL-4 is mediated at the level of transcription. IFN-gamma-induced transcription of CAT expression driven by a 243-bp IP-10 promoter fragment was also sensitive to the suppressive effects of IL-4. In contrast, LPS-induced CAT expression was unaffected under identical experimental conditions. The positive transcriptional response to IFN-gamma required an interferon stimulus response element (ISRE) sequence motif located approximately 230 bp upstream from the transcription start site of the IP-10 gene. That this site is the target of the suppressive action of IL-4 is indicated by the ability of IL-4 to inhibit IFN-gamma-mediated transcription from this ISRE sequence in the context of a heterologous promoter. Finally, both IFN-gamma and IL-4 can enhance or induce expression of distinct nuclear factors that exhibit ISRE-specific binding activity. IL-4 does not suppress the IFN-gamma-induced ISRE binding activity. Together, these findings demonstrate that IL-4 inhibits IP-10 mRNA production in murine macrophages by suppressing the formation of new transcripts. Both positive and negative transcriptional activity appears dependent on activation of factors that recognize the ISRE.