IFN-gamma is an immunomodulatory cytokine and uses the STAT-1alpha transcription factor to mediate gene expression. The promyelocytic leukemia (PML) protein regulates transcription as an activator or repressor, depending on the gene under investigation. Herein, we examined the influence of PML on IFN-gamma signaling, using PML wild-type (Pml(+/+)) and deficient (Pml(-/-)) mouse embryonic fibroblasts (MEF). Pml(-/-) MEF exhibit enhanced IFN-gamma-induced STAT-1alpha transcriptional activity compared with Pml(+/+) cells. Moreover, reconstitution of PML in Pml(-/-) MEF reduced STAT-1alpha transcriptional activity to levels comparable to Pml(+/+) MEF. Numerous endogenous IFN-gamma-regulated genes were up-regulated in Pml(-/-) MEF compared with Pml(+/+) MEF. IFN-gamma-mediated STAT-1alpha DNA-binding activity was enhanced in Pml(-/-) cells compared with Pml(+/+) cells. Lastly, IFN-gamma enhanced the formation of a PML-STAT-1alpha complex in the nucleus. These data suggest a novel function for PML in the IFN-gamma signaling pathway by inhibiting STAT-1alpha DNA binding and transcriptional activity.