TGF-β1 (TGF) has been implicated in the pathogenesis of several chronic infections and is thought to promote microbial persistence by interfering with macrophage function. In rats with experimental pulmonary cryptococcosis, increased lung levels of TGF were present at 12 mo of infection. Within the lung, expression of TGF localized to epithelioid cells and foamy macrophages in areas of inflammation. Increased TGF expression was also observed in the lungs of experimentally infected mice and a patient with pulmonary cryptococcosis. TGF reduced Ab and serum-mediated phagocytosis of Cryptococcus neoformans by rat alveolar macrophages (AM) and peripheral blood monocytes, and this was associated with decreased chemokine production and oxidative burst. Interestingly, TGF-treated rat AM limited both intracellular and extracellular growth of C. neoformans. Control of C. neoformans growth by TGF-treated rat AM was due to increased secretion of lysozyme, a protein with potent antifungal activity. The effects of TGF on the course of infection were dependent on the timing of TGF administration relative to the time of infection. TGF treatment of chronically infected rats resulted in reduced lung fungal burden, while treatment early in the course of infection resulted in increased fungal burden. In summary, our studies suggest a dual role for TGF in persistent fungal pneumonia whereby it contributes to the local control of infection by enhancing macrophage antifungal efficacy through increased lysozyme secretion, while limiting inflammation by inhibiting macrophage/monocyte phagocytosis and reducing associated chemokine production and oxidative burst.