Using immunoaffinity-purified polyclonal antihuman recombinant tumor necrosis factor-alpha (TNF-alpha) F(ab')2 fragments and immunohistochemical techniques, the cells that make TNF-alpha were localized in the inflamed synovial tissue of patients with rheumatoid arthritis (RA) and osteoarthritis (OA). Anti-TNF-alpha antibody-stained cells were demonstrated in 9 of 11 RA and 2 of 4 OA but none of 5 normal synovial membranes examined. In RA, 26-64% of the lining layer cells were positive for TNF-alpha. In the interaggregate area, 10-30% of the cells contained TNF-alpha, often in a perivascular distribution, and up to 19% of the cells in lymphoid aggregates stained for TNF-alpha. Some endothelial cells also stained with these antibodies. In OA tissues, the TNF-alpha-containing cells were found predominantly in the deeper layer. Cells containing TNF-alpha were also found at the cartilage-pannus junction in all 4 RA specimens examined. Double immunofluorescence analysis demonstrated that most TNF-alpha-secreting cells in the RA synovial membrane expressed the monocyte/macrophage marker antigens CD11b and CD14, and a few expressed the T cell marker CD3. Our findings provide histologic evidence that TNF-alpha is locally produced in the lining and deeper layers of the synovium by cells of the monocyte/macrophage lineage, supporting its role in inflammation. Further, our findings demonstrate that TNF-alpha is produced by cells at the cartilage-pannus junction, which could affect chondrocyte metabolism, leading to the cartilage degradation in RA.