We have previously reported that interleukin 10 (IL-10) signalling stimulated activation of a specific enhancer element, termed HTE-1, to promote tissue inhibitor of matrix metalloproteinase1 (TIMP-1) expression in human bone metastatic PC-3 subclone (PC-3 ML) cells. Recently, we have identified an IL-10 responsive signal molecule, termed IL-10E1, which binds the HTE-1 element and cloned the gene encoding for the 22 kDa protein. In this paper, we have examined the mechanism of IL-10/IL-10 receptor signalling in two distinct human prostate cell lines, a 'normal' prostate epithelial cell line, termed NPTX-1532 and highly metastatic PC-3 ML tumour cells. Signalling cascade studies revealed that IL-10 stimulated tyrosine phosphorylation of JAK1 and TYK2 receptor kinases and tyrosine phosphorylation of IL-10E1. Phosphorylation, triggered IL-10E1's rapid translocation to the nucleus by 10-30 min. Deletion analysis combined with transient transfection experiments revealed that the n-terminal domain (approximately 74 a.a.) of the IL-10E1 protein, the nt-nls peptide, was stimulated by IL-10 to translocate to the nucleus and induce TIMP-1 expression. Site-directed mutagenesis further showed that phosphorylation of two tyrosine moieties (Y57 and Y62) of the nt-nls peptide was required for IL-10 activation of signalling and TIMP-1 expression. The data demonstrate, for the first time, that IL-10 receptor signalling of TIMP-1 expression is regulated by tyrosine phosphorylation of a novel gene, IL-10E1, in human prostate cells.