Small intestinal mucosal T cell activation results in villous atrophy and crypt hyperplasia. There is conflicting evidence as to whether a Th1 IFN-gamma response may be involved. Using a murine intestinal transplant model of T cell-mediated enteropathy we aimed to study the role of IFN-gamma on the development of villous atrophy and crypt hyperplasia. Isografts or allografts of foetal small intestine from 129SV-/- IFN-gamma receptor knockout mice or wild type mice were implanted under the kidney capsule of Balb/c recipient mice. Grafts were examined histologically at intervals from 2 to 9 days post implantation for signs of rejection. Quantitative rtPCR for IFN-gamma, TNFalpha and IL-4 was conducted on grafts at 5 and 9 days post implantation. In allografts, rejection accompanied by the development of villous atrophy and crypt hyperplasia, occurred in a time-dependent manner. However this process was markedly slower in the IFN-gamma receptor knockout grafts compared to the wild type grafts at 5 days (chi2 = 10.08, P = 0.007) and 9 days post implantation (chi2 = 13.25, P = 0.004). There were also significantly fewer TNFalpha transcripts in allografts of IFN-gamma-/- intestine than in wild type allografts (P = 0.02). IFN-gamma has a partial, but not obligatory, role in the development of villous atrophy and crypt hyperplasia during T cell mediated rejection of intestinal allografts.