A20 zinc finger protein is a product of a cytokine-induced primary response gene. In this report, we demonstrate that A20 specifically inhibits signal transduction pathways induced by TNF and IL-1, suggesting that it functions as a negative regulator of the cytokine response. Overexpression of A20 in MCF7 breast carcinoma cells or in WEHI-S fibrosarcoma cells inhibits apoptosis induced by TNF, whereas cytotoxicity induced by anti-Fas (anti-CD95); lymphokine-activated killer (LAK) cells, serum starvation, oxidative stress, or okadaic acid is not inhibited. Overexpression of A20 also inhibits TNF-induced activation of phospholipase A2 in a similar dose-dependent manner as it inhibits TNF-mediated apoptosis, whereas it does not affect the activation of phospholipase A2 by anti-Fas. Interestingly, A20 also blocks TNF-induced signal transduction pathways not directly related to the cytotoxicity, namely activation of NF-kappa B and AP-1 transcription factors. Activation of these transcription factors by a functionally related cytokine, IL-1, is also inhibited by A20, whereas activation induced by hydrogen peroxide or phorbol ester is unaffected. Overexpression of A20 does not affect the binding of TNF to its cell surface receptors. These data suggest that A20 functions as a negative regulator of TNF and IL-1, interfering with signal transduction pathways at an early point following receptor binding but before the activation of various second messengers, leading to the wide variety of effects induced by these cytokines.