Hematopoietic progenitor cells (HPC) from mice nullizygous at the Fanconi anemia (FA) group C locus (FAC −/−) are hypersensitive to the mitotic inhibitory effects of interferon (IFN-γ). We tested the hypothesis that HPC from the bone marrow of Fanconi group C children are similarly hypersensitive and that the fas pathway is involved in affecting programmed cell death in response to low doses of IFN-γ. In normal human and murine HPC, IFN-γ primed the fas pathway and induced both fas and interferon response factor-1 (IRF-1) gene expression. These IFN-γ-induced apoptotic responses in HPC from the marrow of a child with FA of the C group (FA-C) and in FAC −/− mice occurred at significantly lower IFN doses (by an order of magnitude) than did the apoptotic responses of normal HPC. Treatment of FA-C CD34⁺ cells with low doses of recombinant IFN-γ, inhibited growth of colony forming unit granulocyte-macrophage and burst-forming unit erythroid, while treatment with blocking antibodies to fas augmented clonal growth and abrogated the clonal inhibitory effect of IFN-γ. Transfer of the normal FAC gene into FA-C B-cell lines prevented mitomycin C–induced apoptosis, but did not suppress fas expression or inhibit the primed fas pathway. However, the kinetics of Stat1-phosphate decay in IFN-γ–treated cells was prolonged in mutant cells and was normalized by transduction of the normal FAC gene. Therefore, the normal FAC protein serves, in part, to modulate IFN-γ signals. HPC bearing inactivating mutations of FAC fail to normally modulate IFN-γ signals and, as a result, undergo apoptosis executed through the fas pathway.