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The effects of synovial conditioned medium (SCM) on DNA, proteoglycan (PG), and protein-collagen synthesis and respective gene expressions, in human articular chondrocytes (AC) and DNA synthesis in synovial fibroblasts (SFb), were studied in monolayer culture. All SCM exhibited concentration-dependent inhibition of [3H]thymidine incorporation in both AC and SFb. In contrast, SCM from three OA patients stimulated [35S]SO4 and [3H]glycine incorporations and the expression (RT-PCR) of aggrecan- and type II collagen-specific mRNAs in AC. The production of agents that inhibit DNA synthesis was blocked by indomethacin and dexamethasone and stimulated by IL-1 beta and TNF-alpha. The inhibitory substances were not produced by heat-inactivated tissue nor cultured SFb or AC and were completely solubles in methanol. It is postulated that synovial tissue secretes lipids, most probably arachidonic acid metabolites. These may counteract growth of an inflammatory synovial pannus by inhibiting SFb proliferation and enhance repair of damaged tissues by stimulating the matrix synthesis.