Interferon-gamma (IFN-gamma) has been shown to regulate epidermal keratinocyte growth and differentiation. In this study, we examined the effects of recombinant human IFN-gamma on the expression of the gene encoding the 230-kDa bullous pemphigoid antigen (BPAG1), a marker of the mitotic basal cell phenotype in the epidermis. Northern analysis revealed a dose- and time-dependent suppression of BPAG1 expression by IFN-gamma in cultured human keratinocytes from several different donors, and incubation of the cells with IFN-gamma in the presence of cycloheximide demonstrated that this effect required ongoing protein synthesis. The inhibition of BPAG1 gene expression was also demonstrated at the protein level by indirect immunofluorescence using a monoclonal antibody recognizing the human 230-kDa bullous pemphigoid antigen. Transient transfections of cultured keratinocytes with BPAG1 promoter-chloramphenicol acetyltransferase reporter gene plasmids indicated marked suppression of the promoter activity by IFN-gamma, and deletion constructs were able to identify a defined region containing the responsive element (IFN-gamma inhibitory element). Reduced transcription of the BPAG1 gene by IFN-gamma was also demonstrated by in vitro nuclear run-on assays. These data, which indicate inactivation of transcription of a basal keratinocyte-specific gene of transcription of a basal keratinocyte-specific gene (BPAG1) by IFN-gamma, provide novel insight into the mechanisms of IFN-gamma-mediated keratinocyte gene regulation and epidermal differentiation in inflammatory diseases.