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Leflunomide is an immunomodulatory agent used for the treatment of rheumatoid arthritis. In this study, we investigated the effect of A77 1726 – the active metabolite of leflunomide – on the production of IL-1 receptor antagonist (IL-1Ra) by human synovial fibroblasts and articular chondrocytes. Cells were incubated with A77 1726 alone or in combination with proinflammatory cytokines. IL-1Ra production was determined by ELISA. A77 1726 alone had no effect, but in the presence of IL-1β or tumour necrosis factor-α it markedly enhanced the secretion of IL-1Ra in synovial fibroblasts and chondrocytes. The effect of A77 1726 was greatest at 100 μmol/l. In synovial fibroblasts and de-differentiated chondrocytes, A77 1726 also increased IL-1β-induced IL-1Ra production in cell lysates. Freshly isolated chondrocytes contained no significant amounts of intracellular IL-1Ra. A77 1726 is a known inhibitor of pyrimidine synthesis and cyclo-oxygenase (COX)-2 activity. Addition of exogenous uridine did not significantly modify the effect of A77 1726 on IL-1Ra production, suggesting that it was not mediated by inhibition of pyrimidine synthesis. Indomethacin increased IL-1β-induced IL-1Ra secretion in synovial fibroblasts and de-differentiated chondrocytes, suggesting that inhibition of COX-2 may indeed enhance IL-1β-induced IL-1Ra production. However, the stimulatory effect of indomethacin was consistently less effective than that of A77 1726. A77 1726 increases IL-1Ra production by synovial fibroblasts and chondrocytes in the presence of proinflammatory cytokines, and thus it may possess chondroprotective effects. The effect of A77 1726 may be partially mediated by inhibition of COX-2, but other mechanisms likely concur to stimulate IL-1Ra production.