Liver X receptors (LXRs) exert key functions in lipid homeostasis and in control of inflammation. In this study we have explored the impact of LXR activation on the macrophage response to the endogenous inflammatory cytokine IFN-γ. Transcriptional profiling studies demonstrate that ∼38% of the IFN-γ-induced transcriptional response is repressed by LXR activation in macrophages. LXRs also mediated inhibitory effects on selected IFN-γ-induced genes in primary microglia and in a model of IFN-γ-induced neuroinflammation in vivo. LXR activation resulted in reduced STAT1 recruitment to the promoters tested in this study without affecting STAT1 phosphorylation. A closer look into the mechanism revealed that SUMOylation of LXRs, but not the presence of nuclear receptor corepressor 1, was required for repression of the NO synthase 2 promoter. We have also analyzed whether IFN-γ signaling exerts reciprocal effects on LXR targets. Treatment with IFN-γ inhibited, in a STAT1-dependent manner, the LXR-dependent upregulation of selective targets, including ATP-binding cassette A1 (ABCA1) and sterol response element binding protein 1c. Downregulation of ABCA1 expression correlated with decreased cholesterol efflux to apolipoprotein A1 in macrophages stimulated with IFN-γ. The inhibitory effects of IFN-γ on LXR signaling did not involve reduced binding of LXR/retinoid X receptor heterodimers to target gene promoters. However, overexpression of the coactivator CREB-binding protein/p300 reduced the inhibitory actions of IFN-γ on the Abca1 promoter, suggesting that competition for CREB-binding protein may contribute to STAT1-dependent downregulation of LXR targets. The results from this study suggest an important level of bidirectional negative cross-talk between IFN-γ/STAT1 and LXRs with implications both in the control of IFN-γ-mediated immune responses and in the regulation of lipid metabolism.