The effector cytokine interferon gamma (IFN-gamma) may play a role in T cell homeostasis. We have examined the requirement for IFN-gamma in one mechanism that regulates T cell expansion and survival, activation-induced cell death (AICD). CD4(+) T cells lacking IFN-gamma or the Stat1 transcription factor are resistant to AICD. IFN-gamma is required for the production of caspases, and retrovirus-mediated expression of caspase-8 restores the sensitivity of Stat1-deficient T cells to AICD. In vitro, IFN-gamma limits the expansion of T cells that are stimulated through their antigen receptors. Thus, IFN-gamma may function to control the expansion and persistence of T cells by promoting caspase-8-dependent apoptosis.