Previous work from our laboratory has demonstrated that major histocompatibility complex (MHC) antigens are expressed on cultured bovine luteal cells following exposure to the T lymphocyte-derived cytokine, interferon-gamma (IFN-gamma). In light of these actions of IFN-gamma, it was of interest to investigate the effects of this cytokine on other aspects of luteal function. Therefore, bovine luteal cells were cultured for 7 days in the presence or absence of IFN-gamma, and luteal progesterone (P4), prostaglandin F2 alpha (PGF2 alpha), and 6-keto-prostaglandin F1 alpha (6-keto-PGF1 alpha) production were evaluated. After a 24-h exposure to IFN-gamma (100 U), both PGF2 alpha and 6-keto-PGF1 alpha production were decreased approximately 50% (p less than 0.05). However, as time in culture progressed, IFN-gamma markedly increased the synthesis of both prostaglandins approximately 400% above controls (p less than 0.05). Stimulation of prostaglandin production by IFN-gamma was abrogated by the addition of exogenous P4. During the period of IFN-gamma-stimulated prostaglandin synthesis, LH-stimulated P4 production was inhibited by IFN-gamma treatment. However, the suppression of P4 production by IFN-gamma was not mediated by the increase in prostaglandins since concomitant treatment with indomethacin did not reverse the inhibition of steroidogenesis. These results suggest that IFN-gamma, in addition to an indirect role in promoting immune response mechanisms, may also directly affect luteal function by enhancing luteal prostaglandin synthesis and by inhibiting luteal steroidogenesis.