Interferon-γ (IFN-γ) is believed to play a deleterious role in the immune-mediated demyelinating disorder multiple sclerosis. Here we have exploited transgenic mice that ectopically express IFN-γ in a temporally controlled manner in the CNS to specifically study its effects on remyelination in the cuprizone-induced demyelination model and in experimental autoimmune encephalomyelitis (EAE), an animal model of multiple sclerosis. CNS delivery of IFN-γ severely suppressed remyelination in both models and impaired the clinical recovery of the mice experiencing EAE. These observations correlated with a dramatic reduction of oligodendroglial repopulation in the demyelinated lesions. Moreover, we found that in cuprizone-treated mice the detrimental actions of IFN-γ were associated with endoplasmic reticulum (ER) stress in remyelinating oligodendrocytes. Compared with a wild-type genetic background, the presence of IFN-γ in mice heterozygous for a loss of function mutation in the pancreatic ER kinase (PERK), a kinase that responds specifically to ER stress, further reduced the percentage of remyelinated axons and oligodendrocyte numbers in cuprizone-induced demyelinated lesions. Thus, these data suggest that IFN-γ is capable of inhibiting remyelination in demyelinated lesions and that ER stress modulates the response of remyelinating oligodendrocytes to this cytokine.