Acute hepatitis and recovery from woodchuck hepatitis virus (WHV) infection involves increased intrahepatic expression of interferon-gamma (IFN-gamma) and tumour necrosis factor-alpha (TNF-alpha) mRNAs. In the present study, recovery correlated with increased intrahepatic expression of mRNAs for major histocompatibility complex class 1 (MHC1), beta(2)-microglobulin, 2'5'-oligoadenylate synthetase (2'5'-OAS), and indoleamine dioxygenase (IDO). By comparison, acute WHV infection progressing to chronicity was associated with diminished expression of these IFN-gamma-associated mRNAs in liver. Transfection of WHV-infected primary hepatocytes (WPH) from WHV carriers with an IFN-gamma-expressing plasmid (pIFN-gamma) resulted in dose-dependent accumulations of MHC1, TNF-alpha, 2'5'-OAS, and IDO mRNAs within 96 h. Markers of T cells and immune-mediated cytotoxicity that accumulate in recovering liver were not apparent in WPH based on the relative lack of CD3, CD4, Fas ligand, perforin, and granzyme B mRNAs. Expression of pIFN-gamma, and TNF-alpha-expressing plasmid (pTNF-alpha), did not affect total WHV RNA, or fully double-stranded WHV DNA in WPH, but each reduced some of the replicative intermediate (RI) species of WHV DNA synthesis. WPH treated with recombinant IFN-alpha protein had a higher fold induction of 2'5'-OAS mRNA associated with partial reductions in WHV RNAs and the major RI species. Thus, IFN-gamma expression in carrier WPH induced several host responses often observed in liver of recovering woodchucks, and impaired a stage of WHV DNA synthesis by a non-cytolytic mechanism mediated by TNF-alpha. Local enhancement of IFN-gamma-associated responses in chronic WHV-infected hepatocytes may promote therapeutic antiviral effects, but additional effector mechanisms evident during recovery appear necessary for more complete clearance of WHV infection.