Endotoxin (lipopolysaccharide [LPS]) tolerance is a state of altered immunity characterized, in part, by suppression of LPS-induced gamma interferon (IFN-gamma) expression. However, the cellular mediators regulating LPS-induced production of IFN-gamma in normal mice and the effect of LPS tolerance on these mediators has not been well characterized. Our studies show that macrophage dysfunction is the primary factor causing suppressed IFN-gamma expression in LPS-tolerant mice. Specifically, LPS-tolerant macrophages have a markedly impaired ability to induce IFN-gamma secretion by T cells and NK cells obtained from either control or LPS-tolerant mice. However, T cells and NK cells isolated from LPS-tolerant mice produce normal levels of IFN-gamma when cocultured with control macrophages or exogenous IFN-gamma-inducing factors. Assessment of important IFN-gamma-regulating factors showed that interleukin-12 (IL-12) and costimulatory signals provided by IL-15, IL-18, and CD86 are largely responsible for LPS-induced IFN-gamma expression in control mice. IL-10 is an inhibitor of IFN-gamma production in both the control and LPS-tolerant groups. Expression of IL-12 and the IL-12 receptor beta1 (IL-12Rbeta1) and IL-12Rbeta2 subunits are suppressed in the spleens of LPS-tolerant mice. LPS-tolerant splenocytes also exhibit decreased production of IL-15 and IL-15Ralpha. However, expression of IL-18 and the B7 proteins CD80 and CD86 are unchanged or increased compared to controls after induction of LPS tolerance. CD28, a major receptor for B7 proteins, is also increased in the spleens of LPS-tolerant mice. Expression of the inhibitory cytokine IL-10 and the IL-10R are sustained after induction of LPS tolerance. These data show that suppression of IFN-gamma production in LPS-tolerant mice is largely due to macrophage dysfunction and provide insight into the cellular alterations that occur in LPS tolerance. This study also better defines the factors that mediate LPS-induced IFN-gamma production in normal mice.