We have demonstrated previously that murine interferon-gamma (MuIFN-gamma) binds to the extracellular domain of the receptor alpha chain through its N-terminus and subsequently to the cytoplasmic domain of the receptor via its C-terminus. Binding of the C-terminus to the cytoplasmic domain of the receptor is thought to occur following endocytosis of the IFN-gamma-receptor complex. In fact, the MuIFN-gamma C-terminus peptide, MuIFN-gamma (95-133), has full agonist activity on macrophages where it is internalized through pinocytosis. Here we examine the structural elements required for the agonist activity of MuIFN-gamma (95-133). Disruption of the alpha helical structure of the peptide by proline substitutions or truncation of the helix resulted in significant loss of binding or loss of antiviral activity or both and induction of MHC class II molecules. Further, removal of the polycationic sequence RKRKR in the tail beyond the helical structure also resulted in loss of agonist activity. Thus, we have isolated the functional site on MuIFN-gamma to the C-terminus and have shown that its helical structure and polycationic tail are required for binding to the cytoplasmic domain of the receptor and induction of biologic activity.