We have previously shown that the intracellular domain of the interferon-gamma (IFN-gamma) receptor plays an obligate role in receptor-mediated signal transduction. Moreover, we have specifically identified two regions within the human IFN-gamma receptor's intracellular domain required for functional activity: the membrane-proximal 48 amino acids required for both functional activity and receptor-mediated ligand internalization and the C-terminal 39 amino acids required exclusively for biologic response induction. Herein we report the identification of the 3 amino acids within the C-terminal region of the receptor that are obligatorily required for receptor function. By using a set of overlapping truncation mutants, the minimal functional sequence within the C-terminal region was localized to residues 434-444 (APTSFGYD-KPH). By mutating each individual residue within this sequence to alanine, three residues (Tyr-440, Asp-441, and His-444) were identified as being critical for IFN-gamma-dependent (i) upregulation of major histocompatibility complex class I proteins, (ii) activation of the IFN regulatory factor 1 gene, and (iii) stimulation of cells to produce nitric oxide. The more conservative Tyr-440-->Phe substitution also resulted in a nonfunctional receptor. Subsequent mutational analysis of all five of the IFN-gamma receptor's intracellular tyrosine residues revealed that Tyr-440 was the sole tyrosine required for receptor activity. These results thus identify a unique sequence in the IFN-gamma receptor that is required for initiation of IFN-gamma-dependent biologic responses and highlight the importance of the hydroxyl side chain of Tyr-440 in this process.