The effect of interferon (IFN)-␥ on p11 expression was studied in two human epithelial cell lines (BEAS-2B and HeLa). Treatment with IFN-␥ resulted in increased steady-state levels of p11 mRNA and protein expression, with a time-dependent and dose-dependent effect. Transient transfection experiments of a reporter gene construct containing ؊1498 bp of the 5-flanking region of the p11 promoter demonstrated that IFN-␥ induced p11 gene expression at the transcriptional level. These effects were inhibited at the promoter and protein levels by a specific JAK-2 kinase inhibitor, AG-490. Functional analysis of the p11 promoter indicates that two ␥-activated sequence elements (GAS) located at positions ؊1219 and ؊1090 are important for the induction of the p11 promoter by IFN-␥. Transfection of mutated reporter constructs demonstrated that the mutation at the GAS-2 site (؊1090) inhibited the p11 promoter activity, with a reduction of about ϳ73% and mutation at the GAS-3 site (؊1219) eliminated about 26% of the p11 promoter activity. A STAT1 dominant negative mutant vector at Tyr-701 (JAK kinase phosphorylation site) blocked the effect of IFN-␥ on the p11 promoter activity. IFN-␥ induced a rapid tyrosine phosphorylation and nuclear translocation of STAT1 protein, which is involved in the binding to the GAS-2 site in the p11 promoter by EMSA analysis. These data suggest that IFN-␥-induced p11 expression is mediated through the binding of STAT1 to GAS sites in the p11 promoter. Inhibition of p11 expression by inhibitory antisense RNAs (iRNA) treatment resulted in enhanced IFN-␥ and calcium ionophor-stimulated arachidonic acid release suggesting that at least in part IFN-␥-stimulated p11 expression may serve a counterregulatory role.