Expression of the chitinase 3-like protein HC-gp39 (human cartilage glycoprotein 39) is associated with conditions of increased matrix turnover and tissue remodelling. High levels of this protein have been found in sera and synovial fluids of patients with inflammatory and degenerative arthritis. In order to assess the role of HC-gp39 in matrix degradation induced by inflammatory cytokines, we have examined its effect on the responses of connective tissue cells to TNF-alpha (tumour necrosis factor-alpha) and IL-1 (interleukin-1) with respect to activation of signalling pathways and production of MMPs (matrix metalloproteases) and chemokines. Stimulation of human skin fibroblasts or articular chondrocytes with IL-1 or TNF-alpha in the presence of HC-gp39 resulted in a marked reduction of both p38 mitogen-activated protein kinase and stress-activated protein kinase/Jun N-terminal kinase phosphorylation, whereas nuclear translocation of nuclear factor kappaB proceeded unimpeded. HC-gp39 suppressed the cytokine-induced secretion of MMP1, MMP3 and MMP13, as well as secretion of the chemokine IL-8. The suppressive effects of HC-gp39 were dependent on phosphoinositide 3-kinase activity, and treatment of cells with HC-gp39 resulted in AKT-mediated serine/threonine phosphorylation of apoptosis signal-regulating kinase 1. This process could therefore be responsible for the down-regulation of cytokine signalling by HC-gp39. These results suggest a physiological role for HC-gp39 in limiting the catabolic effects of inflammatory cytokines.