We have previously reported that K562, a chronic myelogenous leukemia cell line, releases a low molecular weight factor (6 to 8 Kd) that inhibits human polymorphonuclear neutrophil (PMN) adherence and adherence-related functions tested in vitro. We now report that this factor, which we have named K562 inhibitory factor (K562-IF), has potent anti-inflammatory activity in mice, associated with an inhibition of PMN functions. Its in vitro actions were less marked with mouse PMN than with human PMN. They included (1) an inhibition of both nonstimulated locomotion and locomotion induced by FMLP or serum; (2) an inhibition of the chemiluminescence induced by opsonized zymosan, but not that induced by phorbol myristate acetate or FMLP; (3) an inhibition of the degranulation stimulated by opsonized zymosan, as reflected by lactoferrin and lysozyme release; and (4) a decrease in arachidonic acid release and leukotriene B4 production by A23187- stimulated PMN. The in vivo actions of K562-IF after intraperitoneal injection included (1) an inhibition of subcutaneous PMN accumulation at the site of injection of opsonized zymosan (PMN accumulated neither outside the vessels nor intravascularly, as shown by means of histochemistry); (2) an inhibition of neutrophil accumulation in the peritoneum of mice having received sodium caseinate or opsonized zymosan intraperitoneally; and (3) lysozyme concentration in neutrophils having reached the peritoneum after opsonized zymosan treatment equal to that in blood, suggesting diminished release. PMN influx and degranulation in the peritoneum were reduced by 50% after 3 hours of treatment with 1 microgram of K562-IF (equivalent to the effect of 120 micrograms of prednisolone). Taken together, these results show that K562-IF is a potent anti-inflammatory agent that acts by inhibiting PMN functions.