Mice deficient in interferon (IFN)-gamma or IFN-gamma receptor develop progressive and fatal experimental autoimmune encephalomyelitis (EAE). We demonstrate that CD4 T cells lacking IFN-gamma production were required to passively transfer EAE, indicating that they were disease-mediating cells in IFN-gamma knockout (KO) mice. IFN-gamma KO mice accumulated 10-16-fold more activated CD4 T cells (CD4(+)CD44(hi)) than wild-type mice in the central nervous system during EAE. CD4(+)CD44(hi) T cells in the spleen and central nervous system of IFN-gamma KO mice during EAE showed markedly increased in vivo proliferation and significantly decreased ex vivo apoptosis compared with those of wild-type mice. IFN-gamma KO CD4(+)CD44(hi) T cells proliferated extensively to antigen restimulation in vitro and accumulated larger numbers of live CD4(+) CD44(hi) T cells. IFN-gamma completely suppressed proliferation and significantly induced apoptosis of CD4(+)CD44(hi) T cells responding to antigen and hence inhibited accumulation of live, activated CD4 T cells. We thus present novel in vivo and in vitro evidence that IFN-gamma may limit the extent of EAE by suppressing expansion of activated CD4 T cells.