Synovial fluid mononuclear cells (SFMC) from patients with active rheumatoid arthritis characteristically respond poorly to mitogens. In this study, mitogenic antibodies reactive with the CD3(T3) antigen on human T lymphocytes were used to analyze the basis for the deficiency. OKT3-induced proliferation and release of interleukin 1 (IL-1) and interleukin 2 (IL-2) from SFMC were depressed in all patients. Purified IL-1 or recombinant IL-2 restored proliferative responses in SFMC and increased IL-2 receptor density. Exogenous IL-1 also enhanced IL-2 release. Fractionation of SFMC supernatants on phosphocellulose columns revealed the presence of IL-1 and a potent IL-1 inhibitor. The monocyte-derived IL-1 inhibitor blocked IL-1-dependent responses of normal peripheral blood lymphocytes to OKT3, but had no effect on IL-2-dependent events. These results suggest that IL-1 inhibitor(s) in SFMC impair(s) OKT3-induced mitogenesis by interfering with the effects of IL-1 on T lymphocytes. The net result is deficient IL-2 secretion, IL-2 receptor expression, and impaired cellular proliferation. This novel inhibitory circuit provides a rational explanation for the diminished function of synovial fluid T lymphocytes in rheumatoid arthritis patients.