This work was undertaken to study the effects of various doses of interferon-gamma (IFN-gamma) on developing granulation tissue in rats and on granulation tissue-derived fibroblasts in culture. For in vivo studies cylindrical hollow sponge implants were used as an inductive matrix for the growth of granulation tissue. In the test groups the implants were injected daily for four days with a solution containing 160, 800, 4000, or 20000 units of IFN-gamma while the implants of the control group were treated correspondingly with the carrier solution only. Analyses of granulation tissue in the sponge cylinders, carried out 7 days after implantation, showed an IFN-gamma-related decrease in the formation of new granulation tissue. The largest, dose-dependent effect was seen in the accumulation of collagen. For in vitro studies, cultures of rat granulation tissue fibroblasts were treated with 100, 500, 1000, or 5000 units/ml of IFN-gamma. IFN-gamma decreased collagen synthesis to about 50 per cent of that in controls. IFN-gamma treatment also decreased type I procollagen mRNA levels maximally by 41 per cent from the control level. It is concluded that IFN-gamma inhibits the formation of new granulation tissue by decreasing collagen synthesis.