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Interleukin 13 is a key cytokine that mediates airway hyper-responsiveness and mucus over-production, and several anti-IL-13 therapeutic antibodies are currently in clinical development for the treatment of asthma. Conventional cell-based bioassays for evaluating neutralization potencies of IL-13 antagonists are semi-quantitative or with a low sensitivity. Here, we report the development of a highly sensitive bioassay to assess the potency of IL-13 antagonists using human lung epithelial A-549 cells that produce thymus and activation-regulated chemokine (TARC) in response to IL-13 stimulation. The A-549 cells were responsive to both wild type and a variant form of recombinant human IL-13 in a concentration-dependent manner, with a 16 to 24 h exposure time found to be within the linear portion of the bioassay response range. The Effective Concentration at 50% of the maximal response (ED50) of IL-13 determined for the assay was 1-5 ng/mL. With this level of IL-13, an anti-IL-13 antibody B-B13 yielded an approximate median Inhibitory Concentration (IC50) value of 0.2 nM. Bioassay optimization was performed to achieve best assay condition and sensitivity. Additionally, IL-13 antagonist potency against natural human IL-13 was also investigated in the A-549 cell bioassay.