The receptor-associated protein tyrosine kinases JAK1 and JAK2 are both required for the interferon (IFN)-gamma response. The effects of expressing kinase-negative JAK mutant proteins on signal transduction in response to IFN-gamma in wild-type cells and in mutant cells lacking either JAK1 or JAK2 have been analysed. In cells lacking endogenous JAK1 the expression of a transfected kinase-negative JAK1 can sustain substantial IFN-gamma-inducible gene expression, consistent with a structural as well as an enzymic role for JAK1. Kinase-negative JAK2, expressed in cells lacking endogenous JAK2, cannot sustain IFN-gamma-inducible gene expression, despite low level activation of STAT1 DNA binding activity. When expressed in wild-type cells, kinase-negative JAK2 acts as a dominant-negative inhibitor of the IFN-gamma response. Further analysis of the JAK/STAT pathway suggests a model for the IFN-gamma response in which the initial phosphorylation of JAK1 and JAK2 is mediated by JAK2, whereas phosphorylation of the IFN-gamma receptor is normally carried out by JAK1. The efficient phosphorylation of STAT 1 in the receptor-JAK complex may again depend on JAK2. Interestingly, a JAK1-dependent signal, in addition to STAT1 activation, appears to be required for the expression of the antiviral state.