Based on observations of fluctuations in progenitors for inflammatory cells during allergic responses, we have proposed that a primary determinant of allergic inflammation involves microenvironmental influences on hemopoietic cell differentiation and phenotype; in addition, as a corollary of this, inflammatory cell burden is proposed as an important indicator of the severity and pattern of the inflammatory process in allergy. The studies outlined here focus on the effects of epithelial-cell- and fibroblast-derived cytokines on granulocytic and monocytic cell differentiation and activation in models involving allergic reactions in the upper and lower airways. Pure cultures of nasal or bronchial epithelial cells or fibroblasts are observed to give rise to cytokines important in inducing the differentiation of basophils, eosinophils, neutrophils and monocyte/macrophages. Gene expression, production and secretion of granulocyte/macrophage-colony-stimulating factor, interleukin-6 (IL-6) and IL-8 can be demonstrated in vitro and in vivo. Up-regulation of gene expression and production of these cytokines, which are important in inducing basophil, eosinophil and neutrophil/macrophage differentiation in several assays, is seen with IL-1 and the neuropeptide substance P; conversely, inhibition of cytokine production by structural cells is observed after pretreatment with corticosteroids in vitro, paralleling in vivo effects. Other modulatory effects also examined include: antiallergic compounds, which may affect posttranscriptional events in cytokine production, and heavy metal ions, which can also induce changes in gene expression. Structural-cell-derived extracellular matrices appear also to be important both in mast cell differentiation and in macrophage cytokine gene expression, both of which potentially feedback upon chronic allergic inflammatory processes, leading to their perpetuation. On the basis of these studies, it is proposed that microenvironmental controls of the inflammatory process involve the initiation and perpetuation of allergic inflammation through effects on cell differentiation by altered structural cells resident in the tissue. In vivo models to directly test this hypothesis are currently under exploration.