We have recently shown that the nuclear localization of IFNγ is mediated by a polybasic nuclear localization sequence (NLS) in its C terminus. This NLS is required for the full expression of biological activity of IFNγ, both extracellularly and intracellularly. We now show that this NLS plays an integral intracellular role in the nuclear translocation of the transcription factor STAT1α activated by IFNγ. Treatment of IFNγ with antibodies to the C-terminal region (95-133) containing the NLS blocked the induction of STAT1α nuclear translocation. The antibodies had no effect on nuclear translocation of STAT1α in IFNα treated cells. A deletion mutant of human IFNγ, IFNγ(1-123), which is devoid of the C-terminal NLS region was found to be biologically inactive, but was still able to bind to the IFNγ receptor complex on cells with a K(d) similar to that of the wild-type protein. Deletion of the NLS specifically abolished the ability of IFNγ(1-123) to initiate the nuclear translocation of STAT1α, which is required for the biological activities of IFNγ following binding to the IFNγ receptor complex. Thus, the NLS region appears to contribute minimally to extracellular high-affinity receptor-ligand binding, yet exerts a strong functional role in STAT1α nuclear localization. A high-affinity site for the interaction of the C-terminal NLS domain of IFNγ with a K(d) approx. 3 x 10-8 M-1 has been described by previous studies on the intracellular cytoplasmic domain of the IFNγ receptor α-chain. To examine the role of the NLS at the intracellular level, we microinjected neutralizing antibodies raised against the C-terminal NLS domain of IFNγ into the cytoplasm of cells before treatment of cells with IFNγ. These intracellular antibodies specifically blocked the nuclear translocation of STAT1α following the subsequent treatment of these cells extracellularly with IFNγ. These data show that the NLS domain of IFNγ interacts at an intracellular site to regulate STAT1α nuclear import. A C-terminal peptide of murine IFNγ, IFNγ(95-133), that contains the NLS motif, induced nuclear translocation of STAT1α when taken up intracellularly by a murine macrophage cell line. Deletion of the NLS motif specifically abrogated the ability of this intracellular peptide to cause STAT1α nuclear translocation. In cells activated with IFNγ, IFNγ was found to as part of a complex that contained STAT1α and the importin-α analog Npi-1, which mediates STAT1α nuclear import. The tyrosine phosphorylation of STAT1α, the formation of the complex IFNγ/Npi-1/STAT1α complex and the subsequent nuclear translocation of STAT1α were all found to be dependent on the presence of the IFNγ NLS. Thus, the NLS of IFNγ functions intracellularly to directly to directly regulate the activation and ultimate nuclear translocation STAT1α.