Because hematopoietic cells derived from Fanconi anemia (FA) patients of the C-complementation group (FA-C) are hypersensitive to the inhibitory effects of interferon gamma (IFN gamma), the products of certain IFN gamma -inducible genes known to influence hematopoietic cell survival were quantified. High constitutive expression of the IFN gamma -inducible genes, IFN-stimulated gene factor 3 gamma subunit (ISGF3 gamma), IFN regulatory factor-1 (IRF-1), and the cyclin-dependent kinase inhibitor p21(WAF1) was found in FANCC mutant B lymphoblasts, low-density bone marrow cells, and murine embryonic fibroblasts. Paradoxically, these cells do not activate signal transducer and activator of transcription (STAT) 1 properly. In an attempt to clarify mechanisms by which FA-C cells overexpress IFN-gamma -inducible genes in the face of defective STAT1 phosphorylation, it was reasoned that decreased levels of activated STAT1 might result in reduced expression of a hematopoietic IFN-gamma -responsive protein that normally modulates expression of other IFN gamma -responsive genes. Levels of the IFN gamma -inducible factor IFN consensus sequence binding protein (ICSBP), a negative trans-acting regulator of some IFN gamma -inducible genes, were quantified. ICSBP levels were reduced in FA-C B lymphoblasts and MEFs. However, enforced expression of ICSBP failed to down-regulate IRF-1, ISGF3 gamma, and p21(WAF1). Thus, the FANCC protein functions to modulate expression of a family of genes that in normal cells are inducible only by specific environmental cues for apoptosis or mitogenic inhibition, but it does so independently of the classic IFN-STAT1 pathway and is not the direct result of reduced ICSBP expression. (Blood. 2001;97:3017-3024) (C) 2001 by The American Society of Hematology.