Transforming growth factor-beta (TGF-beta) has been shown to be produced in the central nervous system (CNS). The functions of TGF-beta, however, remain to be elucidated. We investigated the effects of TGF-beta on the proliferation, activation, and cytokine production of isolated microglia in vitro. TGF-beta dose-dependently suppressed the acid phosphatase activity of and formation of superoxide anion by LPS activated microglia. It also suppressed the IFN-gamma-induced expression of class II MHC Ag- and the production of cytokines, IL-1, IL-6, and TNF-alpha, by these cells. TGF-beta also inhibited the proliferation of microglia that was induced by either GM-CSF or M-CSF. Because various immunoregulatory cytokines are produced in the CNS that serve as autocrine or paracrine mediators it is suggested that TGF-beta could be a negative regulator in the CNS cytokine network. It may play a role in the development of various disease processes in the CNS by inhibiting the function of microglia in inflammation or in immunoregulation.