Interferon (IFN)-gamma and macrophages (Mphi) play key roles in acute, persistent, and latent murine cytomegalovirus (MCMV) infection. IFN-gamma mechanisms were compared in embryonic fibroblasts (MEFs) and bone marrow Mphi (BMMphi). IFN-gamma inhibited MCMV replication in a signal transducer and activator of transcription (STAT)-1alpha-dependent manner much more effectively in BMMphi (approximately 100-fold) than MEF (5-10-fold). Although initial STAT-1alpha activation by IFN-gamma was equivalent in MEF and BMMphi, microarray analysis demonstrated that IFN-gamma regulates different sets of genes in BMMphi compared with MEFs. IFN-gamma inhibition of MCMV growth was independent of known mechanisms involving IFN-alpha/beta, tumor necrosis factor alpha, inducible nitric oxide synthase, protein kinase RNA activated (PKR), RNaseL, and Mx1, and did not involve IFN-gamma-induced soluble mediators. To characterize this novel mechanism, we identified the viral targets of IFN-gamma action, which differed in MEF and BMMphi. In BMMphi, IFN-gamma reduced immediate early 1 (IE1) mRNA during the first 3 h of infection, and significantly reduced IE1 protein expression for 96 h. Effects of IFN-gamma on IE1 protein expression were independent of RNaseL and PKR. In contrast, IFN-gamma had no significant effects on IE1 protein or mRNA expression in MEFs, but did decrease late gene mRNA expression. These studies in primary cells define a novel mechanism of IFN-gamma action restricted to Mphi, a cell type key for MCMV pathogenesis and latency.