With the use of a partial sequence of the human genome, we identified a gene encoding a novel soluble receptor belonging to the class II cytokine receptor family. This gene is positioned on chromosome 6 in the vicinity of the IFNGR1 gene in a head-to-tail orientation. The gene consists of six exons and encodes a 231-aa protein with a 21-aa leader sequence. The secreted mature protein demonstrates 34% amino acid identity to the extracellular domain of the IL-22R1 chain. Cross-linking experiments demonstrate that the protein binds IL-22 and prevents binding of IL-22 to the functional cell surface IL-22R complex, which consists of two subunits, the IL-22R1 and the IL-10R2c chains. Moreover, this soluble receptor, designated IL-22-binding protein (BP), is capable of neutralizing IL-22 activity. In the presence of the IL-22BP, IL-22 is unable to induce Stat activation in IL-22-responsive human lung carcinoma A549 cells. IL-22BP also blocked induction of the suppressors of cytokine signaling-3 (SOCS-3) gene expression by IL-22 in HepG2 cells. To further evaluate IL-22BP action, we used hamster cells expressing a modified IL-22R complex consisting of the intact IL-10R2c and the chimeric IL-22R1/gammaR1 receptor in which the IL-22R1 intracellular domain was replaced with the IFN-gammaR1 intracellular domain. In these cells, IL-22 activates biological activities specific for IFN-gamma, such as up-regulation of MHC class I Ag expression. The addition of IL-22BP neutralizes the ability of IL-22 to induce Stat activation and MHC class I Ag expression in these cells. Thus, the soluble receptor designated IL-22BP inhibits IL-22 activity by binding IL-22 and blocking its interaction with the cell surface IL-22R complex.