Peripheral blood lymphocytes were separated into HNK-1+ and HNK-1- subpopulations and examined for the effects of prednisolone (PRD) on natural killer cell activities in vitro. Preculture of HNK-1+ lymphocytes with PRD (10(-6) to 10(-8) mol/L) for 72 hours resulted in a significant reduction of cytotoxic functions. When peripheral blood lymphocytes were first precultured with PRD and then separated into HNK-1+ and HNK-1- subpopulations, both could suppress the target binding and lytic activities of fresh large granular lymphocytes with the HNK-1+ cells demonstrating greater inhibition than the HNK-1- cells. Moreover, PRD-treated cells demonstrated greater suppression of target binding and cytotoxicity than identical subpopulations cultured without PRD. Culture supernatants of lymphocytes treated with 10(-6) to 10(-9) mol/L concentrations of PRD contain PRD-induced soluble suppressor factor that significantly inhibited the natural killer activity of allogeneic lymphocytes against different targets. PRD-induced soluble suppressor factor was not cytotoxic itself, and suppression was evident at various effector-to-target cell ratios. These studies indicate that in addition to being directly immunosuppressive, corticosteroids may also induce immunoregulatory lymphocytes to secrete a suppressive lymphokine.