We have previously reported that the polysialoganglioside GT1b suppresses the induction of major histocompatibility complex class I molecules by interferon-gamma in astrocytes. Suppression by GT1b depended on the presence of sialic acid moieties because asialo-GM1 was not suppressive. In the present report, GT1b was found to act transcriptionally to suppress class I genes because both the interferon-gamma induction of RNA and the activity of class I promoter constructs were inhibited. Furthermore, GT1b suppressed promoter activity through interferon regulatory factor elements, indicating an effect on the transcription activation factor, interferon regulatory factor 1. Interferon-gamma induced interferon regulatory factor 1 within 8 h, and GT1b suppressed this induction. The suppression of interferon regulatory factor 1 by GT1b correlated with the suppression of gamma-activated factor binding at the promoter of the interferon regulatory factor 1 gene. The suppression of gamma-activated factor by GT1b appeared to involve increased protein tyrosine phosphatase activity because treatment of the cells with pervanadate reversed the effect of GT1b on the gamma-activated factor and, correspondingly, phosphotyrosine content. In sum, GT1b displays specific effects on interferon-gamma signaling and negative feedback regulatory molecules in astrocytes.