Intercellular adhesion molecule-1 (ICAM-1) modulates epithelial and endothelial leukocyte adherence, but epithelial cell ICAM-1 levels (unlike endothelial cell levels) are selectively sensitive to interferon-gamma (IFN-gamma). Nuclear run-off assays indicated that IFN-gamma regulation of epithelial ICAM-1 levels occurs at a transcriptional level, so the basis for selective cytokine control of ICAM-1 expression was investigated using the ICAM-1 gene promoter region. A plasmid construct containing 5.0 kilobases of ICAM-1 gene 5'-flanking region fused to a reporter gene was selectively responsive to IFN-gamma in (human tracheal) epithelial cells but not in (human umbilical vein) endothelial cells, indicating that this region is sufficient to mediate proper cell-specific expression. An IFN-gamma response element (IRE) was localized to a DNA segment (nucleotides -130 to -94) in the ICAM-1 gene by comparisons of nested 5'-deletional constructs and by demonstrating that this segment confers IFN-gamma responsiveness on heterologous promoters. This same IRE formed a single major binding complex (IRE-BC) in gel retardation assays with nuclear proteins from IFN-gamma-stimulated but not unstimulated epithelial cells, and mutation of the IRE consensus motif (TTTCCGGGAAA at -116 to -106) resulted in loss of IRE-protein binding and abolished IFN-gamma responsiveness, indicating that this sequence is required for ICAM-1 IRE function. Comparison of the ICAM-1 IRE to DNA elements that confer IFN responsiveness in other human genes indicated similarity only to response regions in the Fc gamma RI and IRF-1 genes. The findings provide evidence for a distinct IRE subset that combines a DNA element common to all IFN-responsive genes (GAAA) with a distinct flanking sequence (the inverted repeat GAAA) in order to fine-tune IFN responses and activate a subset of immune response genes (ICAM-1, Fc gamma RI, and IRF-1).