A synthetic 17 amino acid peptide (CKS-17) homologous to a highly conserved region of human and animal retroviral transmembrane proteins was investigated for its influence on the in vitro production of IFN-gamma from human peripheral mononuclear cells. The results showed that CKS-17 coupled to a carrier protein, BSA, inhibited production of IFN-gamma in a dose-dependent manner. Controls, consisting of BSA, which had undergone the coupling procedure or neurotensin coupled to BSA in an identical manner as CKS-17, showed no such inhibition. Reduction in IFN-gamma production could not be attributed to decreased viability of cells, delay of IFN-gamma production or to involvement of suppressor cells. Moreover, inhibition of IFN-gamma production was not related to the inhibition of DNA synthesis. The inhibition appeared to be a direct effect of CKS-17 on IFN-gamma-producing cells. Kinetic studies revealed that this suppression occurred when CKS-17 was introduced to the culture concurrent with or within 48 h after introduction of IFN inducers. Preincubation experiments showed that the presence of CKS-17 in the culture medium was not necessary to exert its inhibitory effect. These results suggest that a portion of retroviral envelope proteins possess important immunomodulatory actions.