The in vivo and in vitro immunomodulatory effects of interferon gamma (IFN-gamma) treatment on peripheral blood mononuclear cells (PBMC) from patients with atopic dermatitis (AD) and elevated IgE levels were studied. As part of a double-blind placebo-controlled clinical trial, 14 AD patients were treated with IFN-gamma (n = 7) or saline (n = 7) for 12 weeks. To assess the in vivo effects of IFN-gamma treatment on interleukin (IL)-4-dependent lymphocyte function, we assessed the proliferation of AD PBMC in response to IL-4. Prior to IFN-gamma treatment, AD PBMC had proportionately decreased proliferative responses to IL-4 when compared to IL-2. After 12 weeks of in vivo treatment with IFN-gamma, there was an increase of IL-4- but not IL-2-induced lymphocyte proliferation in seven of eight AD patients. To further study the immunologic basis of these observations, we studied the expression of IL-4 receptor (IL-4R) mRNA and the production of IL-4 by PBMC from AD patients. PBMC from AD patients expressed higher levels of IL-4R mRNA and produced significantly higher amounts of IL-4 than normal controls (p less than 0.05). More importantly, the in vitro addition of IFN-gamma caused significant reduction in both IL-4R and mRNA expression and IL-4 production of PBMC from AD and non-atopic controls. These data indicate that AD is characterized by an in vivo overstimulation of the IL-4-IL-4R pathway. The poor proliferative responses of untreated AD PBMC to exogenous IL-4 may be due to increased levels of endogenous IL-4 production with constant occupancy on the IL-4R. Furthermore, in vivo and in vitro treatment with IFN-gamma down-regulates this pathway.