The regulation of macrophage lipoprotein lipase by cytokines is of potentially crucial importance in the pathogenesis of atherosclerosis. We have shown previously that macrophage lipoprotein lipase expression is suppressed by interferon-gamma (IFN-gamma) at the transcriptional level. We investigated the regulatory sequence elements and the transcription factors that are involved in this response. We demonstrated that the -31/+187 sequence contains the minimal IFN-gamma-responsive elements. Electrophoretic mobility shift assays showed that the binding of proteins to two regions in the -31/+187 sequence was reduced dramatically when the cells were exposed to IFN-gamma. Both competition electrophoretic mobility shift assays and antibody supershift assays showed that the interacting proteins were composed of Sp1 and Sp3. Mutations of the Sp1/Sp3-binding sites in the minimal IFN-gamma-responsive elements abolished the IFN-gamma-mediated suppression of promoter activity, whereas multimers of the sequence were able to impart the response to a heterologous promoter. Western blot analysis showed that IFN-gamma reduced the steady state levels of Sp3 protein. In contrast, the cytokine decreased the DNA binding activity of Sp1 without affecting the protein levels. These studies therefore reveal a novel mechanism for IFN-gamma-mediated regulation of macrophage gene transcription.