Interferon-gamma (IFN-gamma) is an immunomodulator shown to augment the expression of major histocompatibility (MHC) class I/class II antigens on the cell surface. In previous studies, we have demonstrated that the enhanced expression of these antigens on the cell surface is in part due to IFN-gamma-mediated abrogation of antigen shedding. In this study, we demonstrate that IFN-gamma induces structural changes in the cell membrane by altering the cholesterol/phospholipid ratio. Furthermore, such changes not only mediate enhanced expression of antigen on the cell surface but may drive the cells to growth arrest and apoptosis. These results were obtained by employing x-ray diffraction, electron microscopy, and DNA analysis.