Insulin-like growth factors (IGFs) contribute to the maintenance of the cartilage matrix by stimulating proteoglycan synthesis. In contrast, interleukin-1 (IL-1), an inflammatory cytokine, suppresses the synthesis of proteoglycans. In pathological conditions the chondrocytes' responsiveness to IGF-I is decreased, and elevated levels of IGF-binding proteins (IGFBPs) have been implicated as a possible cause. The aim of this study was to investigate the effects of IGF-I and IL-1 on IGFBP production by ovine articular chondrocytes (OAC) and the roles of these IGFBPs in the regulation of proteoglycan synthesis. As revealed by Western ligand and immunoblotting, OACs secreted IGFBP-2 and a 24-kDa IGFBP in culture medium under basal conditions. Exposure of the cells to IGF-I for 48 h resulted in the appearance of IGFBP-5 in the medium. Des(1-3)IGF-I, an IGF-I analog with reduced affinity for IGFBPs, also increased the level of IGFBP-5, but to a lesser extent than IGF-I, whereas LR3IGF-I, which has virtually no affinity for IGFBPs, had no effect on IGFBP-5. Furthermore, IGFBP-5 underwent a time-dependent limited proteolysis when incubated with OAC-conditioned medium, degrading into 22- and 16-kDa fragments. The degradation of IGFBP-5 was significantly inhibited by IGF-I, but not by des(1-3)IGF-I or LR3IGF-I. Basic fibroblast growth factor, transforming growth factor-beta, and platelet-derived growth factor had no effect on OAC IGFBPs. However, IL-1alpha increased the IGFBP-5 level in a dose-dependent manner, showing maximum activity at 200 U/ml. Furthermore, IL-1alpha, but not IGF-I, induced IGFBP-5 messenger RNA expression, as assessed by Northern blot analysis. Coincubation of IGF-I with IL-1alpha resulted in a substantially increased IGFBP-5 protein level, suggesting a synergism between the mechanisms of action of these two factors. Des(1-3)IGF-I and LR3IGF-I were 10 times more potent than IGF-I in stimulating proteoglycan synthesis, indicating inhibition of IGF-I activity by endogenous IGFBPs. IL-1alpha reduced the IGF-I bioactivity, but had no effect on the activities of the IGF-I analogs, thus implying that locally produced IGFBPs, particularly IGFBP-5, which was substantially increased when IGF-I and IL-1alpha were coincubated, mediated the reduction of the IGF-I activity. Our results demonstrate that IGF-I and IL-1alpha synergistically increase the level of IGFBP-5 in OAC by inhibiting the proteolysis and stimulating the expression of IGFBP-5, respectively. Furthermore, the attenuation of IGF-I-stimulated proteoglycan synthesis by IL-1alpha in OAC appears to be mediated by chondrocyte IGFBPs. We conclude that locally produced IGFBPs, in particular IGFBP-5, may play a critical role in the regulation of cartilage matrix degradation in inflammatory and degenerative arthritides.