Intracellularly expressed interferon γ (IFNγ) has been reported to possess biological activity similar to that of IFNγ added to cells. This study addresses the mechanisms for such similar biological effects. Adenoviral vectors were used to express a non-secreted form of human IFNγ or a non-secreted mutant form in which a previously demonstrated nuclear localization sequence (NLS), 128KTGKRKR134, was replaced with alanines at K and R positions. With the vector expressing non-secreted wild-type IFNγ, biological responses normally associated with extracellular IFNγ, such as antiviral activity and MHC class I upregulation, were observed, although the mutant IFNγ did not possess biological activity. Intracellular human IFNγ possessed biological activity in mouse L cells, which do not recognize extracellularly added human IFNγ. Thus, the biological activity was not due to leakage of IFNγto the surroundings and subsequent interaction with the receptor on the cell surface. Biological function was associated with activation of STAT1αand nuclear translocation of IFNγ, IFNGR1 and STAT1α. Immunoprecipitation of cellular extracts with antibody to the nuclear transporter NPI-1 showed the formation of a complex with IFNγ-IFNGR1-STAT1α. To provide the physiological basis for these effects we show that extracellularly added IFNγ possesses intracellular signaling activity that is NLS dependent, as suggested by our previous studies, and that this activity occurs via the receptor-mediated endocytosis of IFNγ. The data are consistent with previous observations that the NLS of extracellularly added IFNγ plays a role in IFNγ signaling.