Interferon gamma (IFN-γ) is a 28 kDa homodimeric cytokine that exhibits potent immunomodulatory, anti-proliferative, and antiviral properties. The protein is used to treat chronic granulomatous disease and malignant osteopetrosis, and it is under investigation as a treatment for a variety of cancer, fungal and viral diseases. IFN-γ has a short circulating half life in vivo, which necessitates frequent administration to patients. An unusual feature of IFN-γ is that the protein contains no native cysteines. To create a longer-acting and potentially more effective form of the protein, we introduced a cysteine residue into the IFN-γ coding sequence at amino acid position 103, which is located in a surface-exposed, non-helical region of the protein. The added cysteine residue served as the site for targeted modification of the protein with a cysteine-reactive polyethylene glycol (PEG) reagent. The recombinant protein was expressed in bacteria, purified and modified with 10, 20, and 40 kDa maleimide PEGs. The purified, PEGylated proteins had in vitro bioactivities comparable to IFN-γ, as measured using an in vitro cell growth inhibition assay. The PEGylated proteins displayed 20- to 32-fold longer half lives than IFN-γ in rats, and they were significantly more effective than IFN-γ at inhibiting growth of a human tumor xenograft in athymic mice.