STAT1 mediates Interferon (IFN)-dependent positive and negative regulation of inflammatory gene expression in lung. In this study, we examined the effect of IFN-gamma on the expression of SCGB3A1 which is thought to play crucial roles in inflammation and epithelial cell differentiation in lung. We found that expression of SCGB3A1 was down-regulated by IFN-gamma in a time- and dose-dependent manner in the murine transformed Clara Cells (mtCC) line. IFN-gamma induced the phosphorylation of STAT1, which binds to a STAT-binding element (SBE) in the SCGB3A1 gene promoter, leading to decreased transcriptional activation of this gene.