Nitric oxide (NO) and ornithine, products of NO synthase or arginase, respectively, have opposing biological activities. The effect of mediators of leukocyte activation and inhibition on arginine metabolism of resident mouse peritoneal exudate cells (MPEC) was determined. Factors that increased basal NO synthase activity, interferon (IFN)-gamma and lipopolysaccharide (LPS), decreased arginase activity in intact cells. Transforming growth factor (TGF)-beta1 decreased IFN-gamma-stimulated NO synthase activity and produced a reciprocal increase in urea and ornithine release. TGF-beta1 had no effect on the activity of these enzymes in LPS-stimulated MPEC. Corticosterone (Cort, 100 ng/ml) decreased the basal activity of both enzymes. However, Cort inhibited NO synthase activity and increased ornithine release in MPEC exposed to IFN-gamma or LPS. The difference between arginase activity in intact cells vs. that of cell lysates suggested intracellular inhibition of arginase activity. Products of NO synthase, NO and citrulline, were shown to inhibit MPEC arginase activity under maximal assay conditions. Intracellular pH was not altered by exposure of MPEC to LPS, IFN-gamma, TGF-beta, and Cort. This reciprocal change in arginine metabolism is proposed to be an important component of wound healing. Expression of NO synthase creates a cytotoxic environment that may be important to the early phase of wound healing. As wound healing progresses, increased arginase activity produces an environment favorable for fibroblast replication and collagen production.