Recent report from our laboratory showed that A549 cells representing alveolar epithelial cells produce chemokine interleukin-8 and nitric oxide (NO) when challenged with Mycobacterium tuberculosis. Interferon-gamma (IFN-gamma) played a critical role in priming these cells to generate NO in vitro. In the present study, we report that M. tuberculosis-infected A549 cells are capable of elaborating IFN-gamma as shown by enzyme-linked immunosorbent assay and intracellular staining for IFN-gamma. Secretion profile indicated that M. tuberculosis-infected A549 released significantly high concentration of IFN-gamma at 48 and 72 h post-infection. Low level of IFN-gamma release was also seen to be induced by gamma-irradiated M. tuberculosis and subcellular components of M. tuberculosis. Cell surface receptor analysis showed that the M. tuberculosis-infected A549 cells expressed enhanced levels of IFN-gamma receptors. This observation suggests that the endogenously produced IFN-gamma in response to M. tuberculosis infection plays a role in intracellular regulation of innate immunity against intracellular pathogen such as M. tuberculosis. This observation is further strengthened by the fact that infected A549 cells expressed signal transducer and activator of transcription 1 (STAT1), an important mediator for IFN-gamma signaling pathway, leading to expression of inducible NO synthase and subsequent release of NO in sufficient concentration to be mycobactericidal. Our results show that production of IFN-gamma and enhanced expression of IFN-gamma receptors by infected A549 cells is a local phenomenon occurring as de novo intracellular activity, in response to M. tuberculosis infection. To the best of our knowledge, this is the first report to show that A549 cells interact actively with M. tuberculosis to produce IFN-gamma that might play an important role in innate immunity against tuberculosis.