A significant fraction of the arterial smooth muscle cells in atherosclerotic plaques and injury-induced intimal thickenings express class II major histocompatibility complex (Ia) antigens. This might be the consequence of gamma-interferon secretion by T lymphocytes also present in these lesions. We have therefore analyzed the effects of gamma-interferon on cultured rat aortic smooth muscle cells. Recombinant gamma-interferon inhibited smooth muscle proliferation in vitro in a dose-response relation; inhibition was detectable down to a concentration of 1 unit/ml. In similar concentrations, gamma-interferon also induced Ia expression by the cells. This suggested that Ia antigens might be selectively expressed by nonproliferating smooth muscle cells. In vivo, there was a strong negative correlation between Ia expression and 3H-thymidine labeling of smooth muscle cells in intimal thickenings induced by balloon catheter injury. In rats receiving continuous infusions of 3H-thymidine for two weeks after injury, Ia-positive 3H-positive cells had undergone fewer rounds of replication than Ia-negative ones. This indicates that Ia-expression both in vivo and in vitro is associated with a reduced proliferative capacity. These results suggest that gamma-interferon, a secretory product of activated T lymphocytes, acts as a natural regulator of smooth muscle cell growth and Ia expression in injury-induced intimal thickenings and atherosclerotic plaques.