Deficiency of TGF-beta1 is associated with immune dysregulation and autoimmunity as exemplified by the multifocal inflammatory lesions and early demise of the TGF-beta1 null mice. Elevated NO metabolites (nitrite and nitrate) in the plasma of these mice suggest a participatory role of NO in the pathogenic inflammatory response. To determine the mechanism for this dysregulation, we examined upstream elements that could contribute to the overexpression of NO, including inducible NO synthase (iNOS) and transcription factors Stat1alpha and IFN-regulatory factor-1 (IRF-1). The coincident up-regulation of IFN-gamma, an iNOS inducer, and iNOS, before the appearance of inflammatory lesions, suggests that failed regulation of the IFN-gamma signaling pathway may underlie the immunological disorder in TGF-beta1 null mice. In fact, IFN-gamma-driven transcription factors IRF-1 and Stat1alpha, both of which act as transcriptional activators of iNOS, were elevated in the null mice. Treatment of mice with a polyclonal anti-IFN-gamma Ab reduced expression and activity not only of transcription factors Stat1alpha and IRF-1 but also of iNOS. Furthermore, anti-IFN-gamma treatment delayed the cachexia normally seen in TGF-beta1 null mice and increased their longevity. The global nature of immune dysregulation in TGF-beta1 null mice documents TGF-beta1 as an essential immunoregulatory molecule.