TNF-alpha and lymphotoxin alpha (TNF-beta) are pleiotropic cytokines with regulatory functions in inflammatory reactions and T cell activation. Natural TNF inhibitors such as soluble TNF-binding proteins, i.e. TNFsR55 and TNFsR75, are shed from white blood cells and probably other cells. These naturally occurring inhibitors of TNF are shown to be 10 times less effective than the bivalent antagonist of TNF, recombinant soluble TNF receptor p55-human gamma 3 fusion protein (rsTNFR-p55h gamma 3), in controlling the release of prostaglandin E2 (PGE2) and collagenase by fibroblasts, as well as in controlling T cell proliferation. In order to block the action of rhTNF-alpha added to fibroblasts, a fivefold excess of rsTNFR-p55h gamma 3 was sufficient, but concentrations of a hundred to a thousand times higher were required to obtain a significant inhibition of T cell activation. This concentration appears to be required to block membrane-bound TNF-alpha on peripheral blood mononuclear cells as shown by Scatchard analysis. We additionally show that rsTNFR-p55h gamma 3 at high concentrations also blocks T cell activation by dendritic cells. In conclusion rsTNFR-p55h gamma 3 has a much higher anti-inflammatory effect than immunosuppressive effect.