Free-living Soay sheep (Ovis aries) on the island of Hirta, St Kilda, Scotland, are naturally parasitized by gastrointestinal nematodes, predominantly Teladorsagia circumcincta. In this paper we show that reduced faecal egg counts (FEC) are associated with an allele at a microsatellite locus located in the first intron of the interferon gamma gene (o(IFN)-gamma) in Soay sheep lambs and yearlings, measured at approximately 4 and 16 months of age, respectively. The same allele was also associated with increased T. circumcincta-specific antibody (IgA) in lambs, but not associated significantly in yearlings. Flanking control markers failed to show a significant association with either FEC or IgA. These results suggest that a polymorphic gene conferring increased resistance to gastrointestinal nematode parasites is located at or near the interferon gamma gene, and support previous reports which have mapped a quantitative trait locus (QTL) for resistance to this region in domestic sheep. Our data are consistent with the idea that a functional polymorphism leading to reduced expression or efficacy of (IFN)-gamma could enhance the immune response to gastrointestinal nematodes by favouring the activity of the Th2 cell subset and antibody associated immune mechanisms.