The cytokines IL-4 and IFN-gamma exert biologically antagonistic effects that in part reflect opposing influences on gene transcription. While the molecular mechanisms for IL-4-mediated transcription activation have been extensively studied, little is known about molecular mechanisms required for IL-4 inhibition of IFN-gamma signaling. We have investigated IL-4 inhibition of the IFN-gamma-inducible promoter for IFN regulatory factor-1 (IRF-1). In a cell line with low endogenous Stat6, increasing levels of activated Stat6 at constant doses of IFN-gamma and IL-4 leads to inhibition of the IRF-1 promoter. The Stat1-dependent IFN-gamma activation sequence element of the IRF-1 promoter is a target for Stat6-mediated inhibition despite apparently normal Stat1 DNA binding. However, our data are inconsistent with competition between Stat1 and Stat6 for access to the IRF-1 IFN-gamma activation sequence or for an essential coactivator as a mechanism for this Stat6-mediated inhibition. Instead, the data demonstrate that a threshold of Stat6 transcription activation domains is required for IL-4-dependent inhibition. The findings provide evidence of a novel mechanism in which the Stat6 transcription activation domains play a critical role in the IL-4-mediated inhibition of an IFN-gamma-inducible promoter.