Expression of IL-10 as a transgene inhibits murine mammary tumor growth and metastasis. Using differential display methodology, we sought genes whose expression was modulated by IL-10. We compared mRNA isolated from parental murine mammary 66.1 tumors, as well as tumors derived from neo r -transfected cells and 6 different IL-10-expressing cell lines. We identified 2 cDNA products that were upregulated in all 6 IL-10-expressing tumors in comparison to parental and 66-neo tumors. One cDNA corresponds to the murine guanylate-binding protein gene Gbp-1/Mag-1. The other cDNA corresponds to the chemokine Mig-1 (monokine induced by IFN-␥). Both genes were originally identified in IFN-␥-activated macrophages or macrophage cell lines. We now report that cultured mammary epithelial tumor cell lines also express both genes in response to treatment with IFN-␥ and LPS. Furthermore, IFN-␥ mRNA is elevated in IL-10-expressing tumors in comparison with parental or neo-transfected tumors. Thus, high-level expression of IL-10 as a transgene results in activation rather than suppression of IFN-␥ as well as 2 IFN-␥-inducible genes. Up-regulation of host IFN-␥ is critical to anti-tumor activity since IL-10 no longer inhibits tumor growth in hosts with a deletion in the IFN-␥ gene. Additionally, Gbp-1/Mag-1 and Mig-1 gene induction no longer occur in IFN-␥ mutant mice. Int.