Interferon gamma (IFN-gamma), a potent cytokine inducing a wide range of immunologic activities, is increased in the airway secondary to viral infection or during an inflammatory response. This increase in IFN-gamma concentration may alter the expression of specific airway epithelial cell genes that regulate adaptation of airway inflammatory responses. One protein induced by IFN-gamma is Clara cell secretory protein (CCSP), which may contribute to the attenuation of airway inflammation. This study was done to investigate the molecular mechanism by which IFN-gamma stimulates the expression of the CCSP gene in mouse transformed Clara cells and transgenic mice. Deletion mapping and linker-scanning mutations demonstrated that IFN-gamma-induced expression of CCSP was regulated, in part, at the level of transcription. In vitro and in vivo studies verified that the minimal IFN-gamma-responsive segment was localized to the proximal 166 bp of the 5'-flanking region. Additionally, IFN-gamma-induced expression of CCSP was mediated indirectly through an interferon regulatory factor-1-mediated increase in hepatocyte nuclear factor-3beta.