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Under the influence of transforming growth factor-beta (TGFβ), glioma-associated microglia produce molecules that promote glioma growth and invasion. Olfactomedin-like 3 (<i>Olfml3</i>), a novel, secreted glycoprotein, is known to promote several non-CNS cancers. While it is a direct TGFβ1 target gene in microglia, the role of microglia-derived OLFML3 in glioma progression is unknown. Here, we tested the hypotheses that microglial <i>Olfml3</i> is integral to the pro-tumorigenic glioma-associated microglia phenotype and promotes glioma cell malignancy. Using an <i>Olfml3</i> knockout microglial cell line (N9), we demonstrated that <i>Olfml3</i> is a direct target gene of all TGFβ isoforms in murine microglia. Moreover, loss of <i>Olfml3</i> attenuated TGFβ-induced restraint on microglial immune function and production of cytokines that are critical in promoting glioma cell malignancy. Importantly, microglia-derived OLFML3 directly contributes to glioma cell malignancy through increased migration and invasion. While exposure to conditioned medium (CM) from isogenic control microglia pre-treated with TGFβ increased mouse glioma cell (GL261) migration and invasion, this effect was abolished with exposure to CM from TGFβ-treated <i>Olfml3</i>^-/- microglia. Taken together, our data suggest that <i>Olfml3</i> may serve as a gatekeeper for TGFβ-induced microglial gene expression, thereby promoting the pro-tumorigenic microglia phenotype and glioma cell malignancy.