Several cytokines or growth factors induce macrophages to proliferate, become activated, differentiate, or die through apoptosis. Like the major macrophage activator IFN-gamma, the extracellular matrix protein decorin inhibits proliferation and protects macrophages from the induction of apoptosis. Decorin enhances the IFN-gamma-induced expression of the IAalpha and IAbeta MHC class II genes. Moreover, it increases the IFN-gamma- or LPS-induced expression of inducible NO synthase, TNF-alpha, IL-1beta, and IL-6 genes and the secretion of these cytokines. Using a number of extracellular matrix proteins, we found a negative correlation between adhesion and proliferation. However, the effects of decorin on macrophage activation do not seem to be mediated through its effect on adhesion or proliferation. Instead, this proteoglycan abolishes the binding of TGF-beta to macrophages, as shown by Scatchard analysis of (125)I-labeled TGF-beta, which, in the absence of decorin, showed a K(d) of 0.11 +/- 0.03 nM and approximately 5000 receptors/cell. This was confirmed when we treated macrophages with Abs to block the endogenously produced TGF-beta, which enhanced macrophage activation in a way similar to decorin. The increase in activation mediated by decorin demonstrates that macrophages are under negative regulation that can be reversed by proteins of the extracellular matrix.