Interferon-gamma (IFN-gamma) is a multifunctional cytokine that elicits antifibrotic activity in a variety of organs. In this study, we investigated the potential role and mechanism of IFN-gamma in modulating the fibrogenic action of transforming growth factor (TGF)-beta(1) in tubular epithelial cells. Incubation of human proximal tubular epithelial (HKC) cells with IFN-gamma inhibited TGF-beta(1)-mediated alpha-smooth muscle actin (alpha-SMA) expression. IFN-gamma also abolished TGF-beta(1)-induced fibronectin and plasminogen activator inhibitor-1 (PAI-1) expression. To explore the mechanisms by which INF-gamma inhibits TGF-beta(1) action, the signaling pathways that are critical for mediating the antifibrotic activity of IFN-gamma were studied. Stimulation of HKC cells with IFN-gamma triggered a sustained activation of Erk-1/2 and signal transducer and activator of transcription-3 (Stat3). Blockade of Erk-1/2 activation with an Mek1 inhibitor abolished the inhibitory effect of IFN-gamma on alpha-SMA expression, whereas inhibition of Stat3 activation had no influence. Constitutive activation of Erk-1/2 by ectopic expression of activated Mek1 mimicked IFN-gamma and suppressed TGF-beta(1)-mediated alpha-SMA expression. Interestingly, inhibition of Stat3 activation abolished the ability of IFN-gamma to attenuate TGF-beta(1)-mediated PAI-1 and fibronectin expression in HKC cells. These findings indicate that IFN-gamma is capable of antagonizing the fibrogenic actions of TGF-beta(1) in renal tubular epithelial cells. The antifibrotic action of IFN-gamma appears to be mediated through a coordinated activation of both Erk-1/2 and Stat3 signal pathways in a mutually independent fashion.