Experimental liver allografts undergo spontaneous acceptance despite undergoing rejection during the first few weeks post transplant. We explored the role of interferon-gamma (IFN-gamma) in the spontaneous acceptance of mouse liver allografts. Strain of mouse (CBA) liver allografts transplanted into normal BALB/c mice developed histologic changes typical of rejection that spontaneously regressed, permitting long-term survival of these allografts similar to that of syngeneic grafts. In contrast, CBA liver allografts in IFN-gamma-deficient hosts manifested not only infiltration but also hemorrhage and necrosis, with no survival beyond 14 days. Despite differences in survival, local expression of cytotoxic T-cell genes in the transplant was not increased in IFN-gamma-deficient hosts, but livers in interferon-gamma-deficient mice (GKO) hosts displayed much less induction of major histocompatibility complex (MHC) class I and II expression. To determine whether the difference in survival was secondary to the direct effects of IFN-gamma on the liver, we transplanted livers from IFN-gamma-receptor-deficient mice into normal hosts. Liver allografts lacking IFN-gamma receptors also developed hemorrhage and necrosis with minimal induction of MHC expression. Thus IFN-gamma mediates a direct effect on rejecting liver allografts that reduces hemorrhage and necrosis, induces MHC expression, and is absolutely required for spontaneous acceptance.