Thyroid-associated ophthalmopathy (TAO) is an autoimmune component of Graves' disease characterized by intense inflammation in the setting of volume expansion. At the heart of orbital susceptibility to Graves' disease appears to be the peculiar phenotype of orbital fibroblasts that, when activated by IL-1 beta and other proinflammatory cytokines, produce excess prostaglandin E-2 (PGE(2)) and hyaluronan. T helper type 1 (Th1) cytokines predominate early in TAO, whereas Th2 cytokines are more abundant later. It is currently unknown whether this transition might promote changes in tissue reactivity associated with disease progression. We report here that interferon-gamma and IL-4, representative of these respective classes of cytokines, attenuate IL-1 beta-provoked PGE2 production. This down-regulation is mediated by blocking the induction of prostaglandin endoperoxide H synthase-2 (PGHS-2), the inflammatory cyclooxygenase. The mechanism involves blockade by IL-4 and interferon-gamma of the IL-1 beta-dependent activation of PGHS-2 gene promoter activity. In addition, interferon gamma inhibits IL-1 beta-provoked PGHS-2 mRNA stability. The actions of interferon-gamma and IL-4 are mediated through the Janus kinase 2/signal transducer and activator of transcription signaling pathway and could be abolished by treating with AG490, a specific inhibitor of Janus kinase 2. In contrast, the up-regulation of hyaluronan synthesis by IL-1 beta is enhanced by either IL-4 or interferon-gamma. The latter two cytokines enhance the induction by IL-1 beta of hyaluronan synthase-2 expression. These unexpected findings indicate that the Th1 -> Th2 cytokine transition exerts equivalent influence on PGE(2) and hyaluronan production as TAO progresses from early to late stage.