Several lines of evidence suggest that overexpression of interferon gamma (IFN-gamma) in the marrow microenvironment may play a role in the pathogenesis of marrow suppression in aplastic anemia. We previously showed that overexpression of IFN-gamma by marrow stromal cells inhibits human long-term culture initiating cell activity assayed in vitro to a much greater degree than the addition of soluble IFN-gamma. The effect of IFN-gamma on true repopulating stem cells assayed in vivo has not been studied previously. We compared the effect of co-culture of murine marrow cells in the presence of stromal cells transduced with a retroviral vector expressing murine IFN-gamma vs stromal cells transduced with a control neo vector. Using a murine congenic competitive repopulation assay, there was significantly less long-term repopulating stem cell activity remaining after culture on mIFN-gamma-expressing stroma as compared to control stroma. We also investigated the effect of directly transducing murine bone marrow cells with the mIFN-gamma or control vector. Marrow cells transduced with either vector were transplanted into W/Wv recipient mice. The percentage of vector-containing cells in the mIFN-gamma mice was significantly lower than in the control mice, suggesting that mIFN-gamma-transduced primitive cells may not have survived culture, or that mIFN-gamma directly decreases gene transfer into repopulating cells. Despite no significant differences in white or red blood cells in the mice transplanted with the mIFN-gamma-transduced cells, the number of bone marrow colony-forming unit-C 16 weeks after transplantation was significantly lower in the IFN-gamma group. These data indicate that ectopic or overexpression of mIFN-gamma, especially by marrow microenvironmental elements, may have a marked effect on primitive hematopoiesis as assayed in vivo.