Interferon beta (IFN-beta) has been shown in several clinical trials to have efficacy in MS. Its mechanism of action, however, remains unclear. In this review, several biological activities of IFN-beta are highlighted, including its inhibitory effects on proliferation of leukocytes and antigen presentation. Furthermore, IFN-beta may modulate the profile of cytokine production toward that of the anti-inflammatory phenotype, and this appears to occur in the systemic circulation and within the CNS. Finally, IFN-beta can reduce T-cell migration by inhibiting the activity of T-cell matrix metalloproteinases. These activities are likely to act in concert to account for the mechanism of IFN-beta in MS.