Interferon-γ (IFN-γ) is regarded traditionally as a proinflammatory factor and as the signature cytokine of Th1-dominated autoimmune processes. Early evidence indicative of an opposite, protective role has recently received further attention from reports revealing an increasing number of pathways by which IFN-γ can counteract harmful inflammation in Th1-associated autoimmune diseases. Here, we review evidence for IFN-γ's anti-inflammatory effects primarily from the perspective of one experimental model, collagen-induced arthritis (CIA), and question the classic proinflammatory role of IFN-γ and also the Th1-Th2 paradigm as a basis for explaining the regulation of autoimmune diseases. We conclude that endogenous production of IFN-γ during inflammatory and autoimmune diseases should be considered as a process with bidirectional immunoregulatory consequences, often resulting in moderation of pathology.