An topical ophthalmic formulation containing cyclosporine, an undecapeptide produced by the fungus Beauveria nivea, with immunosuppressant and anti-inflammatory activities. The exact therapeutic mechanism of action of cyclosporine is not known but may involve binding to the cellular protein cytophilin, resulting in inhibition of the enzyme calcineurin. This agent appears to specifically and reversibly inhibit immunocompetent lymphocytes in the G0-or G1-phase of the cell cycle. T-lymphocytes are preferentially inhibited with T-helper cells as the primary target. Cyclosporine also inhibits lymphokine production and release.