This paper describes the identification of a human liver-derived inhibitory protein (LIP), which has recently been purified, as cytoplasmic liver arginase. Arginase activity was purified to homogeneity parallel to lymphocyte proliferation inhibitory activity. The reaction products were identified by thin-layer chromatography to be ornithine and urea from arginine. The enzyme activity could be increased by the addition of manganese ions, and the inhibitory effect on cell proliferation could be reversed by additional arginine. An antiserum against LIP cross-reacted with cytoplasmic calf liver arginase.