We describe a novel mechanism of signaling interaction through which tumor necrosis factor-alpha (TNF-alpha) treatment augments interferon-gamma (IFN-gamma)-induced Stat1alpha DNA-binding complexes and transcriptional activation of a Stat-binding element. In TNF-alpha-treated cells, IFN-gamma-induced phosphorylation of Jak2 kinase is increased, Jak2 kinase activity is enhanced, and genetic studies indicate that TNF-alpha requires Jak2 kinase activity to enhance Stat1alpha tyrosine phosphorylation. Increased Jak2 and Stat1alpha phosphorylation are observed within minutes of coexposure to TNF-alpha/IFN-gamma, suggesting a direct signaling interaction. IFN-gamma receptor chain 1 (IFNGR-1) tyrosine phosphorylation is markedly enhanced in cells treated with TNF-alpha/IFN-gamma without alteration in receptor levels. Thus, there exists a direct signaling interaction between TNF-alpha and IFN-gamma, independent of cooperating enhancer elements, that may be relevant for cytokine action during immune-mediated host defense and inflammatory processes.