Tissue repair is determined by many signals provided in the local environment. Central to this process is the commitment of the parenchymal cell to undergo apoptosis, survive, or proliferate following inflammation. We hypothesize that lung epithelial cell apoptosis is influenced by exposure to cytokines released into the alveolar microenvironment during the inflammatory process. In this investigation we demonstrate that interferon (IFN)-gamma and interleukin (IL)-1beta have opposing effects on Fas-mediated apoptosis in A549 cells, a human lung epithelial cell line. Exposure to IFN-gamma before Fas activation significantly increased caspase activity, caspase processing of CK-18, a key cytoskeletal protein in epithelial cells, and increased the appearance of apoptotic nuclei. Induction of Fas-mediated death by IFN-gamma was 3-fold higher than with Fas activation alone. In contrast, pretreatment with IL-1beta before Fas activation completely inhibited apoptosis. Furthermore, our results demonstrate that IFN-gamma and IL-1beta induce opposite effects at multiple checkpoints during Fas-mediated apoptosis. Most striking, IL-1beta prevented the activation of caspases involved in Fas-mediated death by inducing an anti-apoptotic effect proximal to or at the point of caspase-8 activation. Finally, our investigation demonstrates that the differential impact of IL-1beta and IFN-gamma on Fas-mediated apoptosis are in part dependent on modulation of the PI 3-K/Akt survival pathway.