Bleomycin (BM)-induced pulmonary fibrosis involves excess production of proteoglycans (PGs). Because transforming growth factor-beta(1) (TGF-beta(1)) promotes fibrosis, and interferon-gamma (IFN-gamma) inhibits it, we hypothesized that TGF-beta(1) treatment would upregulate PG production in fibrotic lung fibroblasts, and IFN-gamma would abrogate this effect. Primary lung fibroblast cultures were established from rats 14 days after intratracheal instillation of saline (control) or BM (1.5 units). PGs were extracted and subjected to Western blot analysis. Bleomycin-exposed lung fibroblasts (BLF) exhibited increased production of versican (VS), heparan sulfate proteoglycan (HSPG), and biglycan (BG) compared with normal lung fibroblasts (NLF). Compared with NLF, BLF released significantly increased amounts of TGF-beta(1). TGF-beta(1) (5 ng/ml for 48 h) upregulated PG expression in both BLF and NLF. Incubation of BLF with anti-TGF-beta antibody (1, 5, and 10 microg/ml) inhibited PG expression in a dose-dependent manner. Treatment of BLF with IFN-gamma (500 U. ml(-1) x 48 h) reduced VS, HSPG, and BG expression. Furthermore, IFN-gamma inhibited TGF-beta(1)-induced increases in PG expression by these fibroblasts. Activation of fibroblasts by TGF-beta(1) promotes abnormal deposition of PGs in fibrotic lungs; downregulation of TGF-beta(1) by IFN-gamma may have potential therapeutic benefits in this disease.