Interferon-gamma (IFN-gamma) is a major proinflammatory effector and regulatory cytokine produced by activated T cells and NK cells. IFN-gamma has been shown to play pivotal roles in fundamental immunological processes such as inflammatory reactions, cell-mediated immunity and autoimmunity. A variety of human disorders have now been linked to irregular IFN-gamma expression. In order to achieve proper IFN-gamma-mediated immunological effects, IFN-gamma expression in T cells is subject to both positive and negative regulation. In this study, we report for the first time the negative regulation of IFN-gamma expression by Prospero-related Homeobox (Prox1). In Jurkat T cells and primary human CD4+ T cells, Prox1 expression decreases quickly upon T cell activation, concurrent with a dramatic increase in IFN-gamma expression. Reporter analysis and chromatin immunoprecipitation (ChIP) revealed that Prox1 associates with and inhibits the transcription activity of IFN-,gammapromoter in activated Jurkat T cells. Co-immunoprecipitation and GST pull-down assay demonstrated a direct binding between Prox1 and the nuclear receptor peroxisome proliferator-activated receptor gamma (PPPARgamma, which is also an IFN-gamma repressor in T cells. By introducing deletions and mutations into Prox1, we show that the repression of IFN-gamma promoter by Prox1 is largely dependent upon the physical interaction between Prox1 and PPPARgamma Furthermore, PPPARgammaantagonist treatment removes Prox1 from IFN-gamma promoter and attenuates repression of IFN-gamma expression by Prox1. These findings establish Prox1 as a new negative regulator of IFN-gamma expression in T cells and will aid in the understanding of IFN-gamma transcription regulation mechanisms.