Deletion of nine amino acids from the carboxyl terminus of human IFN gamma (residues 138--146; LFRGRRASQ) resulted in a 7-fold increase in specific antiviral activity. Similar increases in receptor binding affinity were seen. Deletion of residues 136 and 137 (QM) had little additional effect, but removal of Ser135 resulted in a sharp drop in antiviral activity. Further removal of residues 133 and 134 (KR) lowered antiviral activity to 1% of the peak value. Comparison of the proton NMR spectra of selected deletions down to residue 132 showed that there was no significant change in the core protein structure. Deletions down to residue 125 had the same antiviral activity as those to 132, but changes could now be seen in the aromatic proton NMR spectrum of this shorter derivative. Substitution of the homologous murine sequence between residues 124 and 130 (human SPAAKTG; murine LPESSLR) resulted in only a small decrease in antiviral activity, further suggesting that the precise sequence in this region was not critical for activity. Ser135 was substituted with a number of other amino acids with little or no change in activity. The importance of the residues between 131 and 134 for biological activity was corroborated by mutagenesis, although some substitutions in this region were tolerated.