We have shown previously that treatment of SJL/J mice with anti-interferon-γ monoclonal antibody (mAb) exacerbated experimental allergic encephalomyelitis (EAE) only if administered at the time of encephalitogenic challenge. Here we investigate the role of interferon-γ (IFN-γ) and anti-IFN-γ mAb in the early events of T cell activation in vitro. Pretreatment of murine peritoneal exudate cells (PEC) with IFN-γ led to a significant increase in their ability to activate myelin basic protein (MBP)-specific, short-term T cell lines. When exogenous IFN-γ was added to cocultures of T cells and MBP-pulsed PEC, the antigen-specific T cell proliferation was considerably reduced. Anti-IFN-γ mAb added to these cultures neutralized the inhibitory effect of the exogenous IFN-γ on T cell proliferation but had no visible effect on class II MHC expression by the antigen-pulsed PEC present in the same cultures. A reduction in T cell proliferation was also observed when the T cells were treated with IFN-γ prior to coculture with the MBP-pulsed PEC. These results demonstrate that, on one hand, IFN-γ enhances the ability of PEC to induce antigen-specific T cell proliferation but, on the other hand, acts on the T cells themselves by inhibiting their proliferation in response to the antigen-pulsed PEC. This may explain why treatment with anti-IFN-γ antibody in vivo induces EAE exacerbation. © 1992.