Interferon-gamma (IFN-gamma) is a pleiotropic lymphokine whose production is restricted to activated T cells and NK cells. Along with other cytokines, IFN-gamma gene expression is inhibited by the immunosuppressant cyclosporin A. We have previously identified an intronic enhancer region (C3) of the IFN-gamma gene that binds the NF-kappa B protein c-Rel and that shows partial DNA sequence homology with the cyclosporin A-sensitive NFAT binding site and the 3'-half of the NF-kappa B consensus site. Sequence analysis of the IFN-gamma promoter revealed the presence of two additional C3-related elements (C3-1P and C3-3P). In addition, an NF-kappa B site (IFN-gamma kappa B) was identified within the promoter region. Based on this observation, we have analyzed the potential role of NF-kappa B and NFAT family members in regulating IFN-gamma transcription. Electrophoretic mobility shift assay analysis demonstrated that after T cell activation, the p50 and p65 NF-kappa B subunits bind specifically to the newly identified IFN-gamma kappa B and C3-related sites. In addition, we identified the NFAT proteins as a component of the inducible complexes that bind to the C3-3P site. Site-directed mutagenesis and transfection studies demonstrate that calcineurin-inducible transcriptional factors enhance the transcriptional activity of the IFN-gamma promoter through the cyclosporin-sensitive C3-3P site, whereas NF-kappa B proteins functionally interact with the C3-related sites. In addition, when located downstream to the beta-galactosidase gene driven by the IFN-gamma promoter, the intronic C3 site worked in concert with both the IFN-gamma kappa B and the C3-3P site to enhance gene transcription. These results demonstrate that the coordinate activities of NFAT and NF-kappa B proteins are involved in the molecular mechanisms controlling IFN-gamma gene transcription.