Interferon-gamma (IFN gamma) and 1,25-dihydroxyvitamin D [1,25-(OH)2D] each have potent antiproliferative and prodifferentiating effects on keratinocytes. Since keratinocytes produce 1,25-(OH)2D, we explored the possibility that IFN gamma acted on keratinocytes in part by regulating 1,25-(OH)2D production. We cultured human neonatal foreskin keratinocytes for various periods of time in the presence of various concentrations of IFN gamma before assessing their ability to produce 1,25-(OH)2D. The production of 1,25-(OH)2D by preconfluent keratinocytes grown in the presence of serum (which retards differentiation) was stimulated by 1.8 nM IFN gamma. Postconfluent keratinocytes did not respond to 1.8 nM IFN gamma. The production of 1,25-(OH)2D by keratinocytes grown in serum-free medium was maximally stimulated by 0.006 nM IFN gamma and inhibited at concentrations greater than 0.06 nM. Keratinocytes grown in 0.1 mM calcium serum-free medium (which prevents differentiation) were more sensitive to both the stimulatory and inhibitory effects of IFN gamma than keratinocytes grown in 1.2 mM calcium serum-free medium (which permits differentiation). The stimulatory effect of IFN gamma on 1,25-(OH)2D production was maximal after 2 days of incubation. Incubations longer than 2 days showed increasingly less stimulation at the low IFN gamma concentrations and increasingly greater inhibition at the higher IFN gamma concentrations. The inhibitory effects of IFN gamma on 1,25-(OH)2D production paralleled the inhibitory effects of IFN gamma on cell growth. Thus, IFN gamma does regulate 1,25-(OH)2D production by keratinocytes. However, this regulation is modulated by the state of keratinocyte proliferation and differentiation and is influenced by calcium and undefined factors in serum. The data are consistent with the possibility that IFN gamma alters keratinocyte differentiation in part by regulating 1,25-(OH)2D production.