To increase the half-life of a cytokine and target its activation specifically to disease sites, we have engineered a latent cytokine using the latency-associated protein (LAP) of transforming growth factor-beta 1 (TGF-beta 1) fused via a matrix metalloproteinase (MMP) cleavage site to interferon (IFN)-beta at either its N or C terminus. The configuration LAP-MMP-IFN-beta resembles native TGF-beta and lacks biological activity until cleaved by MMPs, whereas the configuration IFN-beta-MMP-LAP is active. LAP provides for a disulfide-linked shell hindering interaction of the cytokine with its cellular receptors, conferring a very long half-life of 55 h in vivo. Mutations of the disulfide bonds in LAP abolish this latency. Samples of cerebrospinal fluid (CSF) or synovial fluid from patients with inflammatory diseases specifically activate the latent cytokine, whereas serum samples do not. Intramuscular injection in arthritic mice of plasmid DNA encoding these constructs demonstrated a greater therapeutic effect of the latent as compared to the active forms.