A characteristic feature of rheumatoid arthritis is hyperplasia of the synovial lining cells and fibroblasts, the source of tissue-degrading mediators, in association with the appearance and persistence of lymphocytes in affected joints. Diseased synovial tissue obtained at arthroscopy from 10 of 12 rheumatoid arthritis patients was found to release a factor(s) that could stimulate quiescent fibroblasts to proliferate in vitro. Mononuclear cells isolated from this synovial tissue and from the synovial fluid spontaneously produced fibroblast-activating factor(s) (FAF). In contrast, synovial tissue from patients with noninflammatory joint disease did not release FAF. By gel filtration, FAF was detected in two peaks (40,000 and 15,000 mol wt) that were consistent with the previously described peripheral blood T lymphocyte- and monocyte-derived factors with identical activity. The mononuclear cells were predominantly OKT3+/Leu-1+ T lymphocytes and OKM1+ cells of monocyte/macrophage lineage that expressed HLA-DR antigens, suggesting prior activation of these cells. Mononuclear cells isolated from the peripheral blood of these patients did not spontaneously secrete FAF. Lymphocytes and monocytes from the site of synovial inflammation appear to be activated in situ to produce factors that may contribute to the hyperplasia and overgrowth of the synovial membrane in rheumatoid arthritis.