After viral bronchiolitis at an early age, Brown Norway (BN) rats develop chronic airway dysfunction consisting of inflammation, remodeling, episodic reversible obstruction, and hyperresponsiveness. We hypothesized that supplementation of interferon gamma (IFN- γ ) during viral illness would alter the inflammatory response and attenuate the postviral sequelae. Weanling rats were treated daily with aerosolized interferon gamma (IFN- γ ), from 2 d prior through 7 d after inoculation, and compared with saline-treated infected rats and with noninfected control rats. The IFN- γ treatment had no significant effect on viral titers, growth retardation, or total bronchoalveolar leukocytes, but there was a slight decrease in lung interleukin-4 (IL-4) mRNA (p = 0.015) during the first week. Despite having minimal effects on the acute illness, the IFN- γ had marked effects on postviral sequelae, the IFN- γ group having less bronchiolar inflammation (p = 0.025) and fibrosis (p = 0.01), and lacking abnormalities in pulmonary resistance (p = 0.028) and dynamic compliance (p = 0.006) compared with the untreated postviral group. We conclude that IFN- γ modulated the inflammatory response to viral illness, such that acute airway injury did not evolve into chronic airway dysfunction. If similar processes contribute to the development of human asthma, it may be possible to interrupt the progression of airway dysfunction with an early immunomodulatory intervention.