Trophoblast cells (TBCs) form the blastocyst-derived component of the placenta and play essential roles in fetal maintenance. The proinflammatory cytokine IFN-gamma plays a central role in activating cellular immunity, controlling cell proliferation, and inducing apoptosis. IFN-gamma is secreted by uterine NK cells in the placenta during pregnancy and in mice is required for proper formation of the decidual layer and remodeling of the uterine vasculature. Despite the presence of IFN-gamma in the placenta, TBCs do not express either MHC class Ia or class II Ags, and are resistant to IFN-gamma-mediated apoptosis. In this study, we demonstrate that IFN-gamma-induced expression of multiple genes is significantly reduced in human trophoblast-derived choriocarcinoma cells relative to HeLa epithelial or fibroblast cells. These results prompted us to investigate the integrity of the JAK/STAT-1 pathway in these cells. Choriocarcinoma cells and HeLa cells express comparable levels of the IFN-gamma receptor. However, tyrosine phosphorylation of JAK-2 is compromised in IFN-gamma-treated choriocarcinoma cells. Moreover, phosphorylation of STAT-1 at tyrosine 701 is substantially reduced in both IFN-gamma-treated human choriocarcinoma and primary TBCs compared with HeLa cells or primary foreskin fibroblasts. A corresponding reduction of both IFN regulatory factor 1 mRNA and protein expression was observed in IFN-gamma-treated TBCs. Treatment of choriocarcinoma cells with the tyrosine phosphatase inhibitor pervanadate significantly enhanced IFN-gamma-inducible JAK and STAT-1 tyrosine phosphorylation and select IFN-gamma-inducible gene expression. We propose that phosphatase-mediated suppression of IFN-gamma signaling in TBCs contributes to fetal maintenance by inhibiting expression of genes that could be detrimental to successful pregnancy.