Goblet cells populate wet-surfaced mucosa including the conjunctiva of the eye, intestine, and nose, among others. These cells function as part of the innate immune system by secreting high molecular weight mucins that interact with environmental constituents including pathogens, allergens, and particulate pollutants. Herein, we determined whether interferon gamma (IFN-γ), a Th1 cytokine increased in dry eye, alters goblet cell function. Goblet cells from rat and human conjunctiva were cultured. Changes in intracellular [Ca(2+)] ([Ca(2+)](i)), high molecular weight glycoconjugate secretion, and proliferation were measured after stimulation with IFN-γ with or without the cholinergic agonist carbachol. IFN-γ itself increased [Ca(2+)](i) in rat and human goblet cells and prevented the increase in [Ca(2+)](i) caused by carbachol. Carbachol prevented IFN-γ-mediated increase in [Ca(2+)](i). This cross-talk between IFN-γ and muscarinic receptors may be partially due to use of the same Ca(2+)(i) reservoirs, but also from interaction of signaling pathways proximal to the increase in [Ca(2+)](i). IFN-γ blocked carbachol-induced high molecular weight glycoconjugate secretion and reduced goblet cell proliferation. We conclude that increased levels of IFN-γ in dry eye disease could explain the lack of goblet cells and mucin deficiency typically found in this pathology. IFN-γ could also function similarly in respiratory and gastrointestinal tracts.