The developmental processes of the oligodendrocyte progenitor cell (OPC) lineage that are targeted by interferon-gamma (IFN-gamma) were studied in primary rat OPC cultures. Under conditions of thyroid hormone-mediated oligodendrocyte differentiation, IFN-gamma produced a dose-dependent apoptotic response in OPCs. The lowest dose tested (15 ng/ml or 75 U/ml) was nonapoptotic, but activated detectable STAT1 DNA-binding. At this dose, IFN-gamma reduced the percentage of mature O1+ cells and increased the percentage of immature A2B5+ OPCs. This was observed without significant change in total cell number and cytotoxicity, and was accompanied by an increase in BrdU-labeled A2B5+ and O4+ cells. FACS analysis confirmed a lack of apoptotic sub-G1 cells and revealed a greater percentage of S- and G2/M-phase OPCs with IFN-gamma treatment. Dual immunostaining with Ki-67 and Olig2 showed a smaller percentage of Olig2+ cells in G0 phase in IFN-gamma-treated OPCs, indicating loss of G1 control. Instead, increased levels and phosphorylation of the checkpoint protein p34cdc2 by IFN- suggested increased partial arrest in G2. IFN-gamma not only sustained expression of PCNA and the G1-S regulators retinoblastoma protein, cyclin D1, cyclin E, and cdk2, but also decreased p27 levels. In addition to changes in cell proliferation and differentiation, IFN-gamma attenuated myelin basic protein (MBP) expression significantly, which was associated with decreased expression of both MBP and Sox10 RNAs. These findings indicate that IFN-gamma not only maintains cell cycle activity that could predispose OPCs to apoptosis, but also overrides G1-G0 signals leading to thyroid hormone-mediated terminal differentiation and myelin gene expression.