We studied the mode of action of the synthetic peptide CKS-17, which is a heptadecapeptide homologous to a highly conserved region of the immunosuppressive retroviral envelope protein p15E, as well as to envelope proteins of the human T cell leukemia virus I and II. Previous studies have established that CKS-17 conjugated to BSA (CKS-17-BSA) inhibited IL-1-mediated tumor toxicity in melanoma cells and proliferation in murine Th clones. We examined the effects of CKS-17-BSA on IL-1 action. CKS-17-BSA did not bind to IL-1, nor did it affect the number of IL-1 receptors, their binding affinity, or their ability to internalize IL-1. However, CKS-17-BSA inhibited production of IL-2 by murine thymoma cells treated with IL-1 or with 12-O-tetradecanoyl phorbol-13 acetate. The potent protein kinase C inhibitor, H7, also inhibited IL-1-mediated responses, while HA1004, a weak inhibitor of protein kinase C, did not. Protein kinase C activity in the cytosolic fraction prepared from thymoma cells was found to be inhibited by CKS-17-BSA in a dose-dependent manner. All of these findings are consistent with the idea that CKS-17-BSA inhibits IL-1-mediated responses by interfering with signal transduction through a protein kinase C pathway.