The CD8 co-receptor can modulate CD8(+) T cell function through its contributions to T cell receptor (TCR) binding and signaling. Here we show that IFN-gamma and IL-4 exert opposing effects on the expression of CD8alpha mRNA and surface CD8 protein during CD8(+) T cell activation. IL-4 caused down-regulation of surface CD8 on ovalbumin (OVA)(257-264)-specific TCR-transgenic OT-I CD8(+) T cells activated with OVA(257-264)-coated antigen presenting cells or polyclonal stimuli, and on wild type CD8(+) T cells activated with polyclonal stimuli. This effect was enhanced in each case when the cells lacked a functional IFN-gamma or IFN-gamma R gene. When WT or IFN-gamma-deficient OT-I CD8(+) T cells were analyzed 9 days after co-injection with control or IL-4-expressing OVA(+) tumor cells into RAG-2(-/-)gamma c(-/-) mice, CD8 levels were highest on WT donor cells from mice that received the control tumor and lowest on IFN-gamma-deficient donor cells from mice that received the IL-4-expressing tumor. The latter CD8(low) cells displayed markedly impaired binding of OVA(257-264)/MHC tetramers and peptide/MHC-dependent degranulation. The data reveal an unexpected role for IFN-gamma in tuning the CD8 co-receptor during primary CD8(+) T cell activation both in vitro and in vivo.