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Leflunomide is a novel immunomodulating drug that has recently been demonstrated to prevent acute rejection and reverse ongoing rejection of kidney and cardiac allografts in rats. In vitro studies here demonstrate that leflunomide suppresses proliferation of human PBL stimulated with (1) allogeneic PBL in a one-way MLR (50% inhibition with 50–25 μM); (2) anti-CD3 mABs plus PMA (50% inhibition with 70 μM leflunomide); and (3) anti-CD28 mABs plus PMA (50% inhibition with 65 μM leflunomide). In contrast, CsA only inhibited T cell proliferation stimulated by anti-CD3 plus PMA. Leflunomide partially inhibited IL-2 production of T cells stimulated with anti-CD3 plus PMA or anti-CD28 plus PMA, whereas CsA completely inhibited IL-2 production by T cells stimulated by the CD3 pathway and only partially inhibited IL-2 production by T cells stimulated by the CD28 pathway. Because comparable levels of IL-2 were produced by CD28-stimulated T cells treated with either CsA or leflunomide, but no inhibition of proliferation was observed in the CsA-treated cultures, we hypothesized that the lowering of IL-2 levels was not the mechanism by which leflunomide inhibited T cell proliferation. This hypothesis was supported by the observations that exogenous IL-2 failed to restore the T cell proliferation in the presence of leflunomide. Loss of T cell responsiveness to IL-2 in the presence of leflunomide was not due loss of expression of IL-2 receptors. Collectively, our data suggest that inhibition of T cell proliferation by leflunomide occurs via inhibition of responsiveness to IL-2.