IFN-gamma is produced by cytotoxic T lymphocytes (CTL) but can also decrease CTL generation. We used IFN-gamma-R1-deficient (GRKO) and IFN-gamma-deficient (GKO) mice to study the effects of IFN-gamma in MLC on the generation of CTL activity and CTL number, IL-2 production and cell proliferation. CTL activity was increased in MLC when GRKO responders or GKO stimulators and responders were used, compared to wild-type (WT) MLC. The number of cells displaying the CTL phenotype (CD3+, CD8+, CD25+) was also increased, accompanied by increased IL-2 production and proliferation. Combinations of WT or GRKO CD4+ T cells with WT or GRKO CD8+ T cells as responders showed that IFN-gamma mostly affects CD4+ T cells to limit CTL generation. Intracellular staining indicated that IL-2 production was largely by CD4+ T cells. Moreover, addition of IL-2 to WT responders mimicked GKO CTL generation and activity, whereas neutralizing IL-2 decreased CTL activity in GRKO and WT responders. Thus IFN-gamma reduces CTL generation in alloimmune responses largely by limiting proliferation of IL-2 producing CD4+ T cells. This creates a feedback loop in which effectors produce IFN-gamma that limits IL-2 production which in turn limits CTL generation.