To obtain information on the role of proteasomes in the immune system, we examined the effect of a major immunomodulatory cytokine, gamma interferon (IFN-gamma), on the expressions, structures, and functions of proteasomes. IFN-gamma greatly increased the levels of the mRNAs encoding LMP2 and LMP7, putative immuno-proteasome subunits encoded by genes within the class II MHC region, and these two subunits synthesized were assembled completely into the proteasomal multi-subunit complex in various types of human cells. The subunit organization of proteasome changed in response to IFN-gamma stimulation, due to assembly of newly synthesized subunits through up- and down-expressions of at least 6 proteasome genes including LMP2/LMP7 without change in the structure of pre-existing proteasomes. Interestingly, IFN-gamma dramatically stimulated the trypsin-like and chymotrypsin-like activities of the multifunctional proteasome and depressed the peptidylglutamyl-peptide-hydrolyzing activity, without affecting the activity for ATP-, ubiquitin-dependent proteolysis. These results indicate that IFN-gamma modifies not only the structural organization of the proteasome, but also its functions. Based on these findings, we discuss the role in the antigen processing/presentation pathway of proteasomes with functional diversity acquired through alteration of their subunit assembly in response to IFN-gamma stimulation.