TNF-related apoptosis-inducing ligand (TRAIL) is able to kill many transformed cells of diverse tissue types. We show that TRAIL is inducible by IFN-γ, by TNF-α, and by infection with human CMV, and has potent antiviral activity in vitro. CMV infection and IFN-γ also reciprocally modulate TRAIL receptor (TRAIL-R) expression. CMV infection increased the expression of TRAIL-R1 and-R2, whereas IFN-γ down-regulated the expression of TRAIL-Rs on uninfected fibroblasts. Moreover, IFN-γ significantly decreased the basal level of NF-κB activation, a known survival factor that inhibits apoptosis. Thus, TRAIL selectively kills virus-infected cells while leaving uninfected cells intact, and IFN-γ potentiates these effects by dynamic modulation of TRAIL and TRAIL-R expression and by sensitizing cells to apoptosis. The regulation of TRAIL and TRAIL-R expression may represent a general mechanism that contributes to the control of TRAIL-mediated apoptosis.