Although IFN-gamma has been generally thought to enhance antitumor immune responses, we found that IFN-gamma can promote tumor escape in the CT26 colon carcinoma by down-regulating the protein expression of an endogenous tumor Ag. gp70, the env product of the endogenous ecotropic murine leukemia virus, has been reported to be the immunodominant Ag of CT26. We show that IFN-gamma down-regulates intracellular and surface levels of gp70 protein resulting in a reduced lysis by CTL, which is restored by pulsing IFN-gamma-treated CT26 with the L(d)-restricted immunodominant AH1 epitope derived from gp70. To investigate the role of CT26 sensitivity to IFN-gamma in vivo, we constructed two variants of CT26, CT26.mugR and CT26.IFN, that are unresponsive to IFN-gamma or express IFN-gamma, respectively. We demonstrate using these variants that tumor responsiveness to IFN-gamma promotes a reduction in tumor immunogenicity in vivo that is correlated with an increased tumor incidence in immune mice. Analysis of the tumors from mice challenged with CT26 or CT26.mugR revealed infiltration of CD8 T cells secreting IFN-gamma. We conclude that IFN-gamma secreted by tumor-infiltrating T cells promotes tumor escape through the down-regulation of the endogenous tumor Ag gp70. These findings have impact on the design of effective antitumor vaccine strategies.