Circumstantial and experimental evidence has implicated the immune cytokine interferon-gamma (IFN-gamma) as a key mediator in the pathological changes that are observed in many demyelinating disorders, including the most common human demyelinating disease, multiple sclerosis. To produce an animal model with which to study the effects of IFN-gamma on the CNS, we have generated transgenic mice in which the expression of IFN-gamma has been placed under the transcriptional control of the myelin basic protein (MBP) gene. Transgenic mice generated with this construct have a shaking/shivering phenotype that is similar to that observed in naturally occurring mouse models of hypomyelination (e.g., shiverer, jimpy, quaking), and these transgenic animals have dramatically less CNS myelin than control animals. Reactive gliosis and increased macrophage/microglial F4/80 immunostaining were also observed. Additionally, major histocompatibility complex (MHC) class I and class II mRNA levels were increased in the CNS of MBP/IFN-gamma transgenic mice, and the increase in MHC class I mRNA expression was detected in both white and gray matter regions. Furthermore, cerebellar granule cell migration was abnormal in these animals. These results strongly support the hypothesis that IFN-gamma is a key effector molecule in immune-mediated demyelinating disorders and indicate that the presence of this cytokine in the CNS may also disrupt the developing nervous system.