Context: Thyroid-associated ophthalmopathy (TAO) manifests as inflammation of orbital connective tissue. Bone marrow-derived CD34(+) fibrocytes infiltrate the orbit in TAO where they become CD34(+) orbital fibroblasts. They express thyroid-specific antigens and thus may contribute to inflammation. Evidence suggests that orbital susceptibility to TAO may involve IL-1, which is modulated by IL-1 receptor antagonists, designated secreted (sIL-1RA) and intracellular (icIL-1RA). Objective: We sought to characterize the expression of sIL-1RA and icIL-1RA in TAO orbital fibroblasts compared to CD34(+) fibrocytes. Design/Setting/Participants: Patients with TAO and healthy donors were recruited from an academic medical center clinical practice. Main Outcome Measures: Real-time PCR, cytokine-specific ELISA, gene promoter activities, transcriptional analysis, mRNA stability, and cytometric cell sorting were performed. Results: Orbital fibroblasts treated with IL-1 beta exhibit greater inductions of IL-1 alpha, IL-1 beta, and prostaglandin endoperoxide H synthase-2 transcripts than do fibrocytes. Fibrocytes express dramatically higher basal levels of both icIL-1RA and sIL-1RA. When treated with IL-1 beta, icIL-1RA is induced in orbital fibroblasts but not sIL-1RA, whereas in fibrocytes, sIL-1RA is dominantly up-regulated. These inductions result from increased steady-state levels of respective mRNAs, enhanced transcript stabilities, and modestly increased gene transcription. Conclusions: Robust responses of TAO orbital fibroblasts to IL-1 beta are a consequence of low-level sIL-1RA expression. This results in poorly opposed actions of IL-1 beta. In contrast, circulating fibrocytes express high levels of sIL-1RA, which are diminished as these cells transition to orbital fibroblasts. These findings identify an explanation for the inflammatory phenotype exhibited by TAO orbital fibroblasts and provide a potential target for altering disease susceptibility.