IFN-α is known to play a key role in autoimmunity, but the mechanisms are uncertain. Although the induction of autoimmunity by IFN-α is consistent with primarily immunomodulatory effects, the high frequency of nonautoimmune inflammation suggests other mechanisms. We used thyroiditis as a model to dissect these possibilities. IFN-α treatment of cultured thyrocytes increased expression of thyroid differentiation markers, thyroglobulin, thyroid-stimulating hormone receptor, thyroid peroxidase, and sodium iodide transporter. RNAseq analysis demonstrated that pathways of Ag presentation, pattern recognition receptors, and cytokines/chemokines were also stimulated. These changes were associated with markedly increased nonapoptotic thyroid cell death, suggesting direct toxicity. To corroborate these in vitro findings, we created transgenic mice with thyroid-specific overexpression of IFN-α under control of the thyroglobulin promoter. Transgenic mice developed marked inflammatory thyroid destruction associated with immune cell infiltration of thyroid and surrounding tissues leading to profound hypothyroidism, findings consistent with our in vitro results. In addition, transgenic mice thyroids showed upregulation of pathways similar to those observed in cultured thyrocytes. In particular, expression of granzyme B, CXCL10, a subset of the tripartite motif-containing family, and other genes involved in recruitment of bystander cytotoxic immune responses were increased. Pathways associated with apoptosis and autophagy were not induced. Taken together, our data demonstrate that the induction of tissue inflammation and autoimmunity by IFN-α involves direct tissue toxic effects as well as provocation of destructive bystander immune responses.