Because synovial fluid monocytes (SFM) in patients with inflammatory arthritis bear an activated phenotype (i.e., high expression of HLA–DR and low expression of the monocyte differentiation antigen Mo2), we assessed the role of γ‐interferon (γ‐IFN) in the activation of these cells. Sensitive and specific radioimmunoassays detected only 0.40 ± 0.20 units/ml of γ‐IFN in the SF of patients with rheumatoid arthritis (RA) and 0.61 ± 0.67 units/ml of γ‐IFN in the SF of patients with other forms of chronic inflammatory arthritis. There was no detectable α‐IFN in any SF studied by radioimmumoassay. Bioassays failed to detect nonimmunoreactive IFN. Synovial tissue (ST) explants produced very little γ‐IFN (0.14 ± 0.091 units/ml), and production was not increased by the presence of indomethacin in the cultures or by removal of adherent cells. However, γ‐IFN was produced if ST was cultivated in the presence of phytohemagglutinin. In SF and ST supernatants, γ‐IFN‐mediated induction of HLA–DR on monocytes was inhibited, even though the amount of immunoreactive IFN was not affected. Prostaglandin E₂ was shown to be one possible inhibitor. We demonstrated that a factor that induces HLA–DR on some individuals' peripheral blood monocytes, and cannot be neutralized by monoclonal anti–γ‐IFN antibody, is present in SF and ST supernatants. These data suggest that activation of SFM may occur by mechanisms other than γ‐IFN.