Acute-on-chronic hepatitis B liver failure (ACHBLF) refers to liver failure occurring in patients with chronic hepatitis B (CHB) related liver diseases. Interferon-γ (IFN-γ) plays an important role in the exacerbation of liver function. However, the exact mechanism, by which IFN-γ mediates ACHBLF, is not fully understood. Forty patients with ACHBLF, fifteen patients with CHB and ten healthy controls were included in this present study. ELISA was performed to measure the level of serum IFN-γ. The methylation status of IFN-γ promoter in peripheral blood mononuclear cells (PBMCs) was determined using methylation-specific PCR. Model for End-stage Liver Disease (MELD) scoring was performed for evaluating the severity of liver failure. The serum level of IFN-γ in patients with ACHBLF or CHB was significantly lower than that in healthy controls, while the serum IFN-γ level in ACHBLF patients was significantly higher than that in CHB patients. In ACHBLF patients, the level of IFN-γ was positively correlated with total bilirubin and MELD score, but negatively correlated with prothrombin time activity. These results suggest the involvement of IFN-γ in the pathogenesis of ACHBLF. Importantly, the degree of methylation of the IFN-γ gene promoter in ACHBLF patients (60%, 24/40) was significantly lower than that in CHB patients (93%, 14/15), but was higher than that in the control group (20%, 2/10). Furthermore, in ACHBLF patients, the serum IFN-γ level was significantly higher in unmethylation group than that in methylation group. In conclusion, enhanced demethylation of IFN-γ gene promoter in PBMCs may be associated with the onset of ACHBLF.