Interferon gamma (IFNγ) induces growth arrest in normal human mammary epithelial cells by establishing a block during mid-G1 corresponding to the time when the retinoblastoma protein (Rb) would normally be inactivated by hyperphosphorylation. IFNγ inhibits the kinase activities of cdk2, cdk4 and cdk6 within 24 h of treatment. Protein levels of the cdks and G1 cyclins do not change within this time period, although cdk4 levels are significantly reduced by 48 h. IFNγ treatment induces p27(Kip1) protein levels, presumably by a post-transcriptional mechanism as no change was observed in the mRNA levels. In addition, IFNγ-induced inhibition of cdk2 and cyclin E-associated kinase activities is accompanied by a 4.5-fold or greater increase of p27(Kip1) in cdk2 complexes. p27 may also have a role in the inhibition of cdk4/6 kinase activities, as p27 protein associated with these complexes was increase by 55-70% after IFNγ. In mammary carcinoma cell lines which are resistant to growth inhibition by IFNγ, p27 levels are not induced by IFNγ nor is cdk2 kinase activity inhibited, despite high baseline levels of p27 in cdk2 complexes. However, exogenous expression of p27 in these cells induces growth arrest. In addition, purified p27 protein added to cdk2 complexes immunoprecipitated from carcinoma cells is able to inhibit the kinase activity in a dose dependent manner. Our results suggest that p27(Kip1) has a role in mediating IFNγ-induced terminal growth arrest. Resistance of mammary carcinomas to growth inhibition by IFNγ does not appear to involve resistance of cdk2 complexes to the action of p27, but rather an inability to appropriately regulate the balance of cdk2, cyclin E and p27 levels.