Liver aqueous extract (LEx) can powerfully inhibit phytohaemagglutinin (PHA)-induced lymphocyte proliferation. The extracellular mechanism of inhibition by LEx was studied. There are three possibilities. (1) The possibility of extracellular inactivation of PHA by LEx was excluded by incubating cells with PHA first, followed by washing, and then incubating cells with LEx. The result was that LEx was still able to inhibit cell proliferation completely. (2) The possibility of competition for cell surface PHA receptors by LEx was excluded by the above experiments plus the use of N-acetyl-D-galactosamine to remove surface-bound PHA. Following this treatment, LEx was still able to inhibit cell proliferation completely. (3) The possibility of arginase-induced arginine depletion resulting in lymphocyte suppression was supported by the following experiments. Cells were incubated in media in which arginine was depleted either by reacting with LEx, and the media were afterwards bound with anti-arginase antibody, or by amino acid constituted media without arginine. The degrees of proliferation inhibition were similar in both treatments. These results indicate the important role of arginine-depletion by LEx, and may account for the LEx-induced lymphocyte inhibition.