The effect of human recombinant interferon-gamma (IFN-gamma) on cultured human cartilage cells was studied by 2 variables: cell proliferation and proteoglycan synthesis. Cell proliferation was determined from 3H-thymidine incorporation rates in monolayer cultured chondrocytes. Proteoglycan synthesis was determined from 35S incorporation rates in monolayers and in chondrocytes cultured in agarose gel. IFN-gamma concentrations used in these experiments ranged from 10(-6) micrograms/ml (0.025 U/ml) to 10(-2) micrograms/ml (250 U/ml). The lowest concentrations are comparable with the synovial fluid levels in inflamed joints of patients with rheumatoid arthritis. At these concentrations, IFN-gamma was found to induce a dose dependent decrease of cell proliferation and of proteoglycan synthesis in monolayer cultured human chondrocytes. The decrease of proteoglycan synthesis was ascribed both to an inhibition of the proteoglycan protein core production and to a downregulation of the glycosaminoglycan chain elongation.