Chronic inflammation containing CD8(+) lymphocytes, neutrophils, and macrophages, and pulmonary emphysema coexist in lungs from patients with chronic obstructive pulmonary disease. Although this inflammatory response is believed to cause the remodeling that is seen in these tissues, the mechanism(s) by which inflammation causes emphysema have not been defined. Here we demonstrate that interferon gamma (IFN-gamma), a prominent product of CD8(+) cells, causes emphysema with alveolar enlargement, enhanced lung volumes, enhanced pulmonary compliance, and macrophage- and neutrophil-rich inflammation when inducibly targeted, in a transgenic fashion, to the adult murine lung. Prominent protease and antiprotease alterations were also noted in these mice. They included the induction and activation of matrix metalloproteinase (MMP)-12 and cathepsins B, H, D, S, and L, the elaboration of MMP-9, and the selective inhibition of secretory leukocyte proteinase inhibitor. IFN-gamma causes emphysema and alterations in pulmonary protease/antiprotease balance when expressed in pulmonary tissues.