The human colonic epithelial cell line HT-29 can be induced by a combination of the cytokines interleukin (IL)-1alpha, tumor necrosis factor alpha, and interferon-gamma to express the inducible form of nitric-oxide synthase (iNOS; Kolios, G., Brown, Z., Robson, R., Robertson, D. A. F., & Westwick, J. (1995) Br. J. Pharmacol. 116, 2866-2872). IL-13 is a potent inhibitor of cytokine-induced iNOS mRNA expression and nitric oxide generation in HT-29 cells via an unknown mechanism. We report here that in HT-29 cells, IL-13 induces a concentration and time-dependent increase in the formation of the lipid products of phosphatidylinositol (PtdIns) 3-kinase, namely phosphatidylinositol (3,4)-bisphosphate and phosphatidylinositol (3,4,5)-trisphosphate. IL-13 also induces a parallel concentration and time-dependent increase in the in vitro lipid kinase activity present in immunoprecipitates of the p85 regulatory subunit of PtdIns 3-kinase. In addition, we also demonstrate that IL-13 stimulates the tyrosine phosphorylation of the adaptor molecule insulin receptor substrate 1, which may facilitate receptor coupling to PtdIns 3-kinase. Both the increases in D-3 phosphatidylinositol lipids and the increased in vitro lipid kinase activity of p85 immunoprecipitates were inhibited by wortmannin and LY294002. Inhibition of the PtdIns 3-kinase activity was paralleled by a reversal of the ability of IL-13 to inhibit iNOS mRNA expression and nitrite generation in HT-29 cells. These data demonstrate that the activation of PtdIns 3-kinase by IL-13 is a key signal that is responsible for the inhibition of iNOS transcription in activated epithelial cells.