IL-4 suppresses the IFN-gamma-induced expression of the IFN regulatory factor-1 (IRF-1) gene, and this suppression is attenuated by increasing the amount of IFN-gamma. The effects of IFN-gamma and IL-4 on transcription of a reporter gene under control of a 1.3-kb fragment from the IRF-1 gene promoter or the STAT binding element (SBE) from this gene in the context of a heterologous promoter are similar to their effects on the endogenous IRF-1 gene. IFN-gamma-dependent transcription of reporter gene is suppressed by IL-4, but IL-4 alone has no trans-activating function. IL-4 treatment does not inhibit the tyrosine phosphorylation or nuclear translocation of IFN-gamma-activated STAT1. Rather, IFN-gamma and IL-4 independently activate STAT1 and STAT6, respectively, and both proteins bind to the IRF-1 SBE in homodimeric form. The affinity of STAT1 for the IRF-1 SBE is higher than the affinity of STAT6, as measured by competition with unlabeled oligonucleotide. These observations suggest that IL-4 may suppress IFN-gamma-stimulated transcription of the IRF-1 gene by activation of STAT6, which can compete with STAT1 for occupancy of the IRF-1 SBE when STAT1 levels are low. Suppression may be attenuated as the quantity of STAT1 relative to that of STAT6 increases in cells treated with increasing amounts of IFN-gamma and displaces STAT6.