Evidence suggests that interferon-gamma (IFN-gamma), a proinflammatory cytokine secreted by activated T lymphocytes, contributes a deleterious effect to immune-mediated demyelinating disorders such as multiple sclerosis and experimental autoimmune encephalomyelitis (EAE). Nevertheless, mouse strains that are normally resistant to EAE induction become susceptible when the gene encoding either IFN-gamma or its receptor is mutated, demonstrating that the role that this cytokine plays in demyelinating disorders is complex. We have examined the effect of IFN-gamma in a chemically induced model of CNS demyelination. Mice that receive through their diet the copper chelator cuprizone display extensive demyelination of the corpus callosum. Remarkably, transgenic mice that ectopically express low levels of IFN-gamma in the CNS did not display evidence of demyelination when treated with cuprizone, nor did they shows signs of oligodendroglial death, astrogliosis, or microgliosis, which are typically seen in treated animals. Myelin protein gene expression was, however, dramatically reduced in both the treated control and the transgenic animals, indicating that demyelination is not an obligatory consequence of a large diminution of myelin protein synthesis. Interestingly, the CNS of the IFN-gamma-expressing mice contained elevated levels of insulin-like growth factor I, which has been demonstrated to have a protective effect against the demyelinating action of cuprizone.