Treatment of cultured peritoneal macrophages with IFN-gamma resulted in tyrosine phosphorylation of IkappaBalpha and IkappaBbeta, NF-kappaB activation, and expression of inducible NO synthase (iNOS). Since tyrosine phosphorylation of IkappaBalpha is sufficient to activate NF-kappaB in Jurkat cells, macrophages were treated with the protein tyrosine phosphatase inhibitor peroxovanadate (POV), which elicited an intense tyrosine phosphorylation of both IkappaB. However, this phosphorylation failed to activate NF-kappaB. Treatment with POV of macrophages stimulated with IFN-gamma or LPS potentiated the degradation of IkappaBalpha and IkappaBbeta, the activation of NF-kappaB, and the expression of iNOS. Analysis of the iNOS gene promoter activity corresponding to the 5'-flanking region indicated that POV potentiates the cooperation between IFN-gamma-activated transcription factors and NF-kappaB. These results indicate that tyrosine phosphorylation of IkappaB is not sufficient to activate NF-kappaB in macrophages and propose a negative role for protein tyrosine phosphatase in the expression of iNOS in response to IFN-gamma.