Gamma interferon (IFN-gamma) is an important mediator with multiple functions in the host defense against viral infection. IFN-gamma, in concert with tumor necrosis factor alpha (TNF-alpha), leads to a remarkable reduction of intrahepatic replication intermediates and specific mRNAs of hepatitis B virus (HBV) by a noncytolytic mechanism in the transgenic mouse model. Thus, it is rational to evaluate the potential value of IFN-gamma for the treatment of chronic HBV infection. In the present study, we expressed recombinant woodchuck IFN-gamma (wIFN-gamma) in Escherichia coli and mammalian cells. wIFN-gamma protected woodchuck cells against infection of murine encephalomyocarditis virus in a species-specific manner. It upregulated the mRNA level of the woodchuck major histocompatibility complex class I (MHC-I) heavy chain in permanent woodchuck WH12/6 cells and regulated differentially the gene expression. However, the level of the replication intermediates and specific RNAs of woodchuck hepatitis virus (WHV) in persistently WHV-infected primary woodchuck hepatocytes did not change despite a treatment with 1,000 U of wIFN-gamma per ml or with a combination of wIFN-gamma and woodchuck TNF-alpha. Rather, hepatocytes derived from chronic carriers had an elevated level of the MHC-I heavy-chain mRNAs, most probably due to the exposure to inflammatory cytokines in vivo. Treatment with high doses of wIFN-gamma led to an abnormal cell morphology and loss of hepatocytes. Thus, wIFN-gamma regulates the gene expression in woodchuck hepatocytes but could not deplete WHV replication intermediates and mRNAs in persistently infected hepatocytes. The cellular response to wIFN-gamma may be changed in hepatocytes from chronically WHV-infected woodchucks. It should be clarified in the future whether the continuous exposure of hepatocytes to inflammatory cytokines or the presence of viral proteins leads to changes of the cellular response to wIFN-gamma.