The activating and inhibitory cytokine signals that act upon epithelial cells in the human lung are critically important for controlling the production of inflammatory mediators from those cells in the context of allergic disease. The cytokines interleukin (IL)-4 and IL-13, derived from T helper (Th)-2 cells and other cell types, are potent inducers of epithelial cell expression of a host of inflammatory molecules, including the chemokines eotaxin-1, -2 and -3. Intracellular signal transduction in response to IL-4/IL-13 occurs largely through activation of signal transducer and activator of transcription 6 (STAT6). Interferon (IFN)-gamma, a Th1-type cytokine, has opposing effects to IL-4/IL-13 in various cell types, including T cells, B-cells, endothelium, and epithelium. In this study, we demonstrate that IL-4-induced STAT6 activation was inhibited profoundly by 24 h pretreatment with IFN-gamma in human primary airway epithelial cell cultures. Using Western blotting, we showed that the levels of both cytoplasmic and nuclear-localized phospho-STAT6 were reduced by IFN-gamma pretreatment, and this effect was dependent on the concentration of IFN-gamma and time of exposure to IFN-gamma. The functional activity of STAT6 was also completely inhibited by IFN-gamma: IL-4-induced luciferase activity from a STAT6-driven reporter construct was suppressed, as was IL-4-induced expression of messenger RNA (mRNA) and protein for eotaxin-3, a STAT6-dependent gene implicated in allergic inflammation. We found that mRNA for suppressor of cytokine signaling (SOCS)-1 and (SOCS)-3, known inhibitors of IL-4 signaling, and IL-13 receptor alpha2, a potential inhibitor of IL-4 signaling, were both strongly induced by IFN-gamma pretreatment. IFN-gamma also increased the rate of decay of IL-4-induced eotaxin-3 mRNA. We conclude that there are multiple mechanisms by which IFN-gamma regulates IL-4- and STAT6-dependent signaling and gene expression in airway epithelial cells. These observations have important implications for the regulation of epithelial cell activation by the balance of Th1/Th2-type cytokines in the airways in allergic disease.