To study the biological relevance of using bovine herpesvirus-1 (BHV-1) as a vector for expressing cytokines, a BHV-1 virus that expressed bovine interferon-gamma (IFN-gamma) was constructed. This recombinant virus (BHV-1/IFNgamma) was then used to infect the natural host in a respiratory disease model. In vitro characterization of the recombinant interferon-gamma confirmed that the cytokine expressed in BHV-1-infected cells was biologically active. The in vivo effects of the recombinant IFN-gamma were then analysed during a primary infection and after reactivation of a latent infection. During the primary infection, similar body temperature, clinical responses and virus shedding were observed for calves infected with either recombinant BHV-1/IFNgamma or parental gC(-)/LacZ(+) virus. An analysis of cellular and humoral responses did not reveal any significant immunomodulation by BHV-1/IFNgamma during the primary infection. The stability and activity of recombinant IFN-gamma was also analysed following the establishment of a latent infection. The presence of recombinant IFN-gamma did not significantly alter virus shedding following reactivation. The isolation of reactivated BHV-1/IFNgamma virus confirmed that a functional IFN-gamma gene was retained during latency. Thus, herpesviruses may provide virus vectors that retain functional genes during latency and recrudescence.