Cryptococcus neoformans is a pathogenic yeast causing disease predominantly in immunosuppressed patients. C. neoformans is acquired by the pulmonary route, where the alveolar macrophage (AM) is a resident mechanism of host defense. The ability of rat AM to be activated by products of the immune response for enhanced anticryptococcal effect has not previously been demonstrated. Rat AM could be activated in vitro for anticryptococcal activity by medium conditioned by concanavalin A-stimulated splenic lymphocytes. A monoclonal antibody that neutralizes interferon-gamma (IFN-gamma) inhibited the macrophage-activating activity of lymphokine-containing medium (LCM). Further, recombinant IFN-gamma activated AM for anticryptococcal activity. The concentration of IFN-gamma in LCM, determined by enzyme-linked immunosorbent assay, was equivalent to the range of concentrations of recombinant IFN-gamma which activated AM. Thus, IFN-gamma was necessary and sufficient for optimal macrophage activation by medium conditioned by proliferating lymphocytes. Lipopolysaccharide could not enhance the anticryptococcal activity produced by optimal concentrations of LCM or IFN-gamma but did augment the effects of submaximal stimulation. Both LCM and recombinant IFN-gamma increased the percentage of macrophages with cell-associated cryptococcus, suggesting that activation of AM enhanced the adhesion or uptake of cryptococcus. We speculate that inadequate availability of lymphokines such as IFN-gamma may result in the immunodeficient state in hosts unable to generate an appropriate response to cryptococcal antigens. Administration of lymphokines such as IFN-gamma to immunosuppressed hosts might circumvent the defect in cell-mediated immunity.