The rate and degree of interferon action on mouse embryo (ME), mouse L, and human amnion (WISH) cells were found to be dependent on the cell density. The most precipitous drop in interferon action occurred just below cell confluency. This effect was shown with both vesicular stomatitis virus and Sindbis virus and at both constant and variable input multiplicities of infection. At both "high" and "low" cell densities, cells attached to a surface develop viral resistance faster than suspended cells. These data indicate that either cell contact or close cell proximity is required for maximal interferon activity. These results are discussed in relation to interferon-induced transfer of viral resistance.