It has become increasingly clear that immune cytokines perform growth and differentiation functions in the nervous system similar to those performed in the immune system. In previous studies we have shown that interleukin-1 beta (IL-1 beta) raises substance P (SP) and the mRNA coding for its preprotachykinin precursor in cultured sympathetic superior cervical ganglia (SCG) (Jonakait and Schotland, 1990; Hart et al., 1991a). The action of IL-1 is blocked both by depolarization of the ganglia and by glucocorticoid hormones (Hart et al., 1991a). In the present report, we have found that IL-1 does not act directly upon neurons to raise SP, but rather induces the production of a soluble intermediate molecule that raises both SP and the cholinergic-specific enzyme ChAT. Its induction by IL-1 is blocked by the synthetic glucocorticoid hormone dexamethasone; its action is compromised under depolarizing conditions. Because medium conditioned by IL-1 (IL-1CM) is functionally similar to leukemia inhibitory factor (LIF), we sought to determine whether this molecule might be an active constituent of IL- 1CM. Immunoprecipitation with an antiserum directed against LIF eliminated large proportions of SP-inducing activity from IL-1CM. In addition, steady-state levels of mRNA coding for LIF are increased by IL-1 treatment of SCG. These data suggest that LIF, induced by IL-1, may ultimately be responsible for the IL-1 induction of SP.