An in vitro cell culture system was used to study the effect of interferon gamma (IFN-gamma) on Chlamydia trachomatis growth and differentiation. The effect of IFN-gamma on chlamydiae was dose-dependent. IFN-gamma at 2 ng/ml completely inhibited chlamydial growth and differentiation; however, persistent infection was established when chlamydiae were cultured with IFN-gamma at 0.2 ng/ml. Persistent infection was characterized by the development of noninfectious atypical chlamydial forms from which infectious progeny could be recovered only when IFN-gamma was removed from the culture system. Analysis of persistently infected cells by immunofluorescent microscopy and immunoblotting with specific antibodies revealed that the atypical chlamydial forms had near-normal levels of the 60-kDa heat shock protein, an immunopathologic antigen, and a paucity of the major outer membrane protein, a protective antigen. Furthermore, steady-state levels of other outer membrane constituents, such as the 60-kDa cysteine-rich outer membrane protein and lipopolysaccharide, were greatly reduced. If IFN-gamma causes similar events to occur in vivo, then persistently infected cells could augment the pathogenesis of the chronic inflammatory sequelae that follow chlamydial infection by serving as depots of antigen capable of stimulating a sustained inflammatory response.