A subset of epithelial immune-response genes (including intercellular adhesion molecule-1 (ICAM-1)) depends on an IFN-γ signal transduction pathway with the Stat1 transcription factor as a critical intermediate. Excessive local activation of this pathway may lead to airway inflammation, so we sought to selectively down-regulate the pathway using a dominant- negative strategy for inhibition of epithelial Stat1 in a primary culture airway epithelial cell model. Using a Stat1-deficient cell line, we demonstrated that transfection of wild-type Stat1 expression plasmid restored appropriate Stat1 expression and IFN-γ-dependent phosphorylation as well as consequent IFN-γ activation of cotransfected ICAM-1 promoter constructs and endogenous ICAM-1 gene expression. However, mutations of Stat1 at Tyr-701 (JAK kinase phosphorylation site), Glu-428/429 (putative DNA-binding site), His-713 (splice site resulting in Stat1β formation), or Ser-727 (MAP kinase phosphorylation site) all decreased Stat1 capacity to activate the ICAM-1 promoter. The Tyr-701 mutant (followed by the His-713 mutant) were most effective in disabling Stat1 function and in overcoming the activating effect of cotransfected wild-type Stat1 in this cell system thereby highlighting the effectiveness of blocking Stat1 homo- and hetero-dimerization. In experiments using primary culture human tracheobronchial epithelial cells (hT-BECs) and each of the four Stat1 mutant plasmids, transfection with the Tyr-701 and His-713 mutants again most effectively inhibited IFN-γ activation of an ICAM-1 gene promoter construct. Then by transfecting bTBECs with wild-type or mutant Stat1 tagged with a Flag reporter sequence, we used dual immunofluorescence to show that hTBECs expressing the Tyr-701 or His-713 mutants were prevented from expressing endogenous ICAM-1 in response to IFN- γ treatment. The capacity of a specific Stat1 mutations to exert a potent dominant-negative effect on IFN-γ signal transduction provides for further definition of Stat1 structure function and a means for natural or engineered expression of mutant Stat1 to selectively down-regulate activity of this pathway in a cell type- or tissue-specific manner during immune and/or inflammatory responses.