Mycobacterium tuberculosis and Mycobacterium leprae, the causative agents of tuberculosis and leprosy, respectively, produce large quantities of lipoarabinomannan (LAM), a highly immunogenic, cell wall-associated glycolipid. This molecule has been previously reported to be a potent inhibitor of gamma interferon-mediated activation of murine macrophages. Studies of the mechanism by which this mycobacterial glycolipid down-regulates macrophage effector functions provide evidence that LAM acts at several levels and that it can (i) scavenge potentially cytotoxic oxygen free radicals, (ii) inhibit protein kinase C activity, and (iii) block the transcriptional activation of gamma interferon-inducible genes in human macrophage-like cell lines. These results suggest that LAM can inhibit macrophage activation and triggering and cytocidal activity and that it may represent a chemically defined virulence factor contributing to the persistence of mycobacteria within mononuclear phagocytes.