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Mammalian TGF-β1 plays a crucial role in maintaining immune tolerance and inhibiting autoimmunity. Although several TGF-β1 homologues have been identified in teleosts, their immunosuppressive functions remain unclear. Herein, we identified and characterized LcTGF-β1, a TGF-β1 homologue from the large yellow croaker (Larimichthys crocea). LcTGF-β1 possesses several features characteristic of the TGF-β superfamily, including an RGD integrin binding site, an RSKR tetrabasic cut site, and nine conserved cysteines in the mature peptide. The LcTGF-β1 gene was constitutively expressed in all examined tissues, with the highest expression in the spleen, which is rich in immune cells. LcTGF-β1 was significantly upregulated in the head kidney and spleen after Vibrio alginolyticus stimulation. LcTGF-β1 was also expressed in primary head kidney lymphocytes (PKLs), monocytes/macrophages (MO/Mφs), and granulocytes (PKGs), and was significantly upregulated in the MO/Mφs after lipopolysaccharide (LPS) stimulation. Recombinant LcTGF-β1 protein (rLcTGF-β1) significantly suppressed reactive oxygen species (ROS) and nitrogen oxide (NO) production in LPS-activated head kidney MO/Mφs. Furthermore, in these MO/Mφs, rLcTGF-β1 strongly inhibited the expression of pro-inflammatory cytokine (TNF-α) and inducible NO synthase (iNOS), while it induced anti-inflammatory cytokines (TGF-β1 and IL-10), arginase-1, and CD206. The phagocytic activity of LPS-activated MO/Mφs was also increased by rLcTGF-β1. Finally, rLcTGF-β1 significantly inhibited the proliferation of T cells (ZAP70+ cells) and downregulated T-cell activation genes (CD3ζ, TCRα, and ZAP70), T-cell marker genes (CD4 and CD8), and IL-2 in PKLs. These results thus provide strong evidence that LcTGF-β1 promotes the alternative activation of head kidney MO/Mφs and inhibits T-cell proliferation in PKLs, highlighting its role in the regulation of immune response in large yellow croaker.