Alveolar type II (ATII) cells inhibit fibroblast proliferation in coculture by releasing or secreting a factor(s) that stimulates fibroblast production of prostaglandin E2(PGE2). In the present study, we sought to determine the factors released from ATII cells that stimulate PGE2production in fibroblasts. Exogenous addition of rat IL-1α to cultured lung fibroblasts induced PGE2secretion in a dose-response manner. When fibroblasts were cocultured with rat ATII cells, IL-1α protein was detectable in ATII cells and in the coculture medium between days 8 and 12 of culture, correlating with the highest levels of PGE2. Furthermore, under coculture conditions, IL-1α gene expression increased in ATII cells (but not fibroblasts) compared with either cell cultured alone. In both mixed species (human fibroblasts-rat ATII cells) and same species cocultures (rat fibroblasts and ATII cells), PGE2secretion was inhibited by the presence of IL-1 receptor antagonist (IL-1Ra) or selective neutralizing antibody directed against rat IL-1α (but not IL-1β). Conditioned media from cocultures inhibited fibroblast proliferation, and this effect was abrogated by the addition of IL-1Ra. Addition of keratinocyte growth factor (KGF) resulted in an earlier increase in PGE2secretion and fibroblast inhibition ( day 8 of coculture). This effect was inhibited by indomethacin but was not altered by IL-1Ra. We conclude that in this coculture system, IL-1α secretion by ATII cells is one factor that stimulates PGE2production by lung fibroblasts, thereby inhibiting fibroblast proliferation. In addition, these studies demonstrate that KGF enhances ATII cell PGE2production through an IL-1α-independent pathway.