Prolific generation of NO by inducible nitric oxide synthase (iNOS) can cause unintended injury to host cells during glomerulonephritis and other inflammatory diseases. While much is known about the mechanisms of iNOS induction, few transcriptional repressors have been found. We explored the role of signal transducers and activators of transcription 3 (STAT3) proteins in interleukin (IL)-1beta- and lipopolysaccharide (LPS)+interferon (IFN)-gamma-mediated iNOS induction in murine mesangial cells. Both stimuli induced rapid phosphorylation of STAT3 and sequence-specific STAT3 DNA-binding activity. Supershift assays with a STAT3 element probe demonstrated that nuclear factor kappaB (NF-kappaB) p65 and p50 complexed with STAT3 in the DNA-protein complex. The direct interaction of STAT3 and NF-kappaB p65 was verified in vivo by co-immunoprecipitation and in vitro by pull-down assays with glutathione S-transferase-NF-kappaB p65 fusion protein and in vitro -translated STAT3alpha. Overexpression of STAT3 dramatically inhibited IL-1beta- or LPS+IFN-gamma-mediated induction of iNOS promoter-luciferase constructs that contained the wild-type iNOS promoter or ones harbouring mutated STAT-binding elements. In tests of indirect inhibitory effects of STAT3, overexpression of STAT3 dramatically inhibited the activity of an NF-kappaB-dependent promoter devoid of STAT-binding elements without affecting NF-kappaB DNA-binding activity. Thus STAT3, via direct interactions with NF-kappaB p65, serves as a dominant-negative inhibitor of NF-kappaB activity to suppress indirectly cytokine induction of the iNOS promoter in mesangial cells. These results provide a new model for the termination of NO production by activated iNOS following exposure to pro-inflammatory stimuli.