Interleukin (IL)-13 mediates its activities via a complex receptor system. Interleukin-13 receptor alpha-1 chain (IL-13Ralpha1) binds IL-13 with low affinity, but does not signal. However, when IL-13Ralpha1 combines with IL-4 receptor alpha (IL-4Ralpha), a signaling high affinity receptor complex for IL-13 is generated. In contrast, IL-13Ralpha2 alone binds IL-13 with high affinity, but does not signal and has been postulated to be a decoy receptor. Herein, we investigated the cellular localization of IL-13Ralpha2 and the regulation of its expression by confocal microscopy and flow cytometry in primary and cultured cells. Our results demonstrate that IL-13Ralpha2 is largely an intracellular molecule, which is rapidly mobilized from intracellular stores following treatment with interferon (IFN)-gamma. Up-regulation of IL-13Ralpha2 surface expression in response to IFN-gamma was rapid, did not require protein synthesis, and resulted in diminished IL-13 signaling. These results provide the first evidence that the IL-13Ralpha2 is predominantly an intracellular molecule and demonstrate a novel mechanism by which IFN-gamma can regulate IL-13 responses.