Interferon-gamma (IFN-gamma) is a proinflammatory cytokine that plays a pivotal role in pathology of diseases in the central nervous system (CNS), such as multiple sclerosis. However, the direct effect of IFN-gamma on neuronal cells has yet to be elucidated. We show here that IFN-gamma directly induces neuronal dysfunction, which appears as dendritic bead formation in mouse cortical neurons and enhances glutamate neurotoxicity mediated via alpha-amino-3-hydroxy-5-methyl-4-isoxazolepropionic (AMPA) receptors but not N-methyl-D-aspartate receptors. In the CNS, IFN-gamma receptor forms a unique, neuron-specific, calcium-permeable receptor complex with AMPA receptor subunit GluR1. Through this receptor complex, IFN-gamma phosphorylates GluR1 at serine 845 position by JAK1.2/STAT1 pathway, increases Ca(2+) influx and following nitric oxide production, and subsequently decreases ATP production, leading to the dendritic bead formation. These findings provide novel mechanisms of neuronal excitotoxicity, which may occur in both inflammatory and neurodegenerative diseases in the CNS.