Members of the interferon regulatory factor (IRF) family of DNA binding transcription factors have roles in growth regulation, antiviral responses, and transcriptional induction of interferon (IFN)-activated early response genes. The IRF family member ISGF3 gamma is the DNA binding component of IFN-stimulated gene factor 3 (ISGF3), a multicomponent complex responsible for the stimulation of IFN-alpha-responsive genes. IFN-alpha-stimulated formation of ISGF3 and subsequent gene expression can be inhibited by phorbol esters or expression of the adenovirus E1A protein. We have investigated IFN signaling in human malignant tumor cell lines of the lung, colon, ovary, cervix, and hematopoietic organs and found some of these cells to be defective for IFN-alpha-induced formation of ISGF3. In many cases, an inhibitory activity termed transcriptional knockout (TKO) correlated with nonresponsiveness. TKO purified from a human papillomavirus-negative cervical carcinoma cell line has a molecular size of 19 kDa. The purified protein interacted with the ISGF3 gamma component of ISGF3, preventing binding of ISGF3 to DNA. Purified TKO displaced ISGF3 from its DNA binding site in vitro and prevented ISGF3 gamma, IRF-1, and IRF-2 from interacting with the IFN-stimulated response element. Partially purified TKO can also directly interact with ISGF3 gamma in the absence of DNA. This protein may be involved with the development of malignancies and the inability of IFN to exert its antiproliferative and antiviral effects.