Interferon (IFN)-gamma has been shown to modulate cell differentiation and the expression of cell surface molecules of cultured human keratinocytes; it also induces cell shedding. We have previously described the properties of desquamin, a cell surface adhesion molecule from the stratum corneum. We report here on the impact of IFN-gamma on the expression of desquamin. We document the related morphological changes in terminal differentiation. We cultured human keratinocytes in three different culture systems: in serum-free medium at low Ca2+ (0.1 mM), at high Ca2+ (1.5 mM), and at high Ca2+ with 10% serum. IFN-gamma (100 U/ml) was added to each culture system after overnight incubation. In all cases, IFN-gamma induced an altered phenotype, as shown by phase contrast and electron microscopy. We exposed cultured cells to antibodies to the desquamins (glycoproteins from the stratum corneum). Immunoflurescent localization and Western blotting showed that the desquamins were expressed only under culture conditions where both serum and IFN-gamma were present. The induction of desquamin expression by IFN-gamma coupled with an increase in cell shedding, suggests that we have developed a suitable culture system for the study of desquamation in vitro.