Liposome-mediated transfection is a widely used technique for the introduction of exogenous DNA into mammalian cells. We observed a significant induction of endogenous interferon (IFN)-stimulated genes (ISGs) in cells treated with the liposomal reagents, lipofectamine and DOSPER, in the absence of DNA. Liposome treatment induced expression of reporter constructs driven by IFN-responsive promoter elements, demonstrating a generalized effect on ISG expression. The kinetics of ISG induction were markedly delayed in response to liposome as compared with IFN or double-stranded RNA. ISG induction could be transferred to naive cells with conditioned medium from liposome-treated cells, suggesting that a secreted factor was responsible for this activity. A cell line defective in IFN signaling was refractory to liposome-induced ISG expression, indicating a role for IFN in this induction. Indeed, liposome treatment directly induced IFN-beta gene expression and, thus, represents a novel IFN inducer. IFN induction by liposomal reagents and its potential effects on transgene expression should be considered in the choice of transfection reagent. The ability of liposomal gene delivery reagents to induce IFN synthesis in the host may prove useful in gene therapy approaches to viral and neoplastic diseases.