Macrophage activation by IFN-gamma results in a cascade of gene expression. To identify genes activated in mouse peritoneal macrophages by IFN-gamma, we created a cDNA subtraction library of IFN-gamma-induced genes. We have isolated from this subtraction library a novel cDNA clone, called Mg21, whose mRNA is absent in unstimulated mouse peritoneal macrophages and is induced to high levels within 4 h following the addition of IFN-gamma. Induction of Mg21 mRNA by IFN-gamma occurred in the presence of cycloheximide, indicating that expression of Mg21 mRNA does not require protein synthesis. A small amount of Mg21 mRNA was also induced by LPS, but not by IL-2, IL-4, IL-10, or TNF-alpha. The DNA sequence of Mg21 is 1617 nucleotides and contains an open reading frame that codes for a protein of 415 amino acids with a predicted molecular weight of 47,106 Da. The predicted amino acid sequence lacks a signal sequence or transmembrane segments, indicating that the protein is an intracellular protein. Computer search of the GenBank and EMBL databases indicates that this cDNA clone is unique but has 57% sequence identity with IRG-47, which is a mouse gene induced by IFN-gamma in pre-B and B lymphocyte cell lines. IRG-47 encodes an intracellular protein that contains three conserved protein motifs present in GTP-binding proteins. Analysis of the protein sequence of Mg21 showed that these three conserved protein motifs are also present in Mg21.