Tumor necrosis factor (TNF), interleukin-1 (IL-1), and gamma interferon (gamma IFN) inhibit erythropoiesis in vivo and in vitro, and have been implicated in the pathogenesis of the anemia of chronic disease. Anemia in patients with rheumatoid arthritis and in animals exposed chronically to IL-1 and TNF can be corrected by the administration of recombinant erythropoietin (Epo). We exposed highly purified human erythroid colony-forming units (CFU-E) cultured from peripheral blood burst-forming units-erythroid (BFU-E) and unpurified human marrow CFU-E to recombinant human gamma IFN and showed inhibition of colony formation in vitro. This inhibition was reversed by increased concentrations of Epo. The mechanisms by which this effect occurs are unknown at present. Epo may cause a downregulation of gamma IFN receptor expression on CFU-E or, alternatively, gamma IFN may cause a downregulation of Epo receptor expression. A full understanding of these mechanisms awaits a more complete comprehension of the regulation of erythropoiesis; however, the effect of Epo in vitro is similar to its ability to correct the anemia of chronic disease in vivo.