The anti-inflammatory action of glucocorticoids has been attributed to the induction of a group of phospholipase A2 inhibitory proteins, collectively called lipocortin. These proteins are thought to control the biosynthesis of the potent mediators of inflammation, prostaglandins and leukotrienes, by inhibiting the release of their common precursor, arachidonic acid, a process that requires phospholipase A2 hydrolysis of phospholipids. Lipocortin-like proteins have been isolated from various cell types, including monocytes, neutrophils and renal medullary cell preparations. The predominant active form is a protein with an apparent relative molecular mass (Mr) of 40,000 (40K). These partially purified preparations of lipocortin mimic the effect of steroids, and mediate anti-inflammatory activity in various in vivo model systems. Using amino-acid sequence information obtained from purified rat lipocortin, we have now cloned human lipocortin complementary DNA and expressed the gene in Escherichia coli. Our studies confirm that lipocortin is a potent inhibitor of phospholipase A2 activity.