We used cultured human diploid lung fibroblasts as a model system to examine the effects of recombinant IFN-gamma on synthesis of collagen, matrix deposition of newly synthesized collagen, and the expression of cell surface receptors for collagen. Using [3H]proline-labeled cells we found that IFN-gamma resulted in dose-dependent inhibition of fibroblast collagen synthesis. Pulse-chase experiments to analyze compartmentalization of newly synthesized collagen showed that the decrease in collagen synthesis was confined to the soluble pool of procollagen in the medium, while extracellular matrix associated collagen was not changed, indicating that a larger proportion of newly synthesized collagen was deposited into the matrix in IFN-gamma exposed fibroblasts (34.2 vs. 25.3%). This increase in the efficiency of collagen matrix deposition was associated with enhanced expression of a cell surface receptor for collagen as detected by indirect immunofluorescence labeling and analysis by flow cytometry. Fibroblasts (IMR-90) cultured in the presence of IFN-gamma (1,000 U/ml) exhibited a twofold increase in mean linear fluorescence intensity compared with cells cultured under control conditions. The distribution of log fluorescence intensity in both control and IFN-gamma exposed cells was normally distributed about the mean, indicating that discrete subpopulations with respect to receptor expression were not present. Increased fluorescence intensity and log normal distribution of fluorescence intensity also were identified in IFN-gamma-treated lung fibroblasts from a normal adult individual and two strains obtained from patients with pulmonary fibrosis. These results indicate that IFN-gamma modulates fibroblast collagen matrix deposition as well as collagen synthesis. The associated increase in collagen receptors suggests that cytokine-mediated modulation of the cell surface maybe a contributing factor in regulation of fibroblast collagen accumulation in the extracellular matrix or in cellular interaction with collagen-containing matrix. Such an effect could modulate the interaction of fibroblasts with extracellular matrix at sites of inflammation and play an important role in the remodeling of matrix during repair from tissue injury.