Hair growth is tightly regulated by the epithelial-mesenchymal interaction of hair follicle cells. To investigate the molecular interaction between epithelial and mesenchymal cells of the hair follicle, the outer root sheath (ORS) cells were cultured with the dermal papilla (DP)-conditioned medium. Using the techniques of differential display reverse transcription-polymerase chain reaction (DD RT-PCR) and Northern blot analysis, we identified that an interferon-inducible gene 6-16 is regulated in the ORS cells when cultured with the DP-conditioned medium. We further studied the effect of the DP-conditioned medium and found that interferon beta, a predominant interferon secreted by the fibroblasts, is expressed by the DP cells. Moreover, the anti-interferon beta neutralized DP-conditioned medium dramatically inhibited the 6-16 mRNA expression. Interferon beta or DP-conditioned medium suppressed the growth of the in vitro cultured ORS cells, suggesting that interferon beta secreted from the DP cells negatively regulates the growth of ORS cells. Together these results reveal the potential importance of the interferon beta as a negative regulator of hair growth. (C) 2002 Elsevier Science (USA).