The ability of interferon (IFN)‐α to induce autoimmunity and exacerbate Th1 diseases is well known. We have recently described enhanced expression of IFN‐α in the mucosa of patients with celiac disease (CD), a gluten‐sensitive Th1‐mediated enteropathy, characterized by villous atrophy and crypt cell hyperplasia. Previous studies from this laboratory have shown that T cell activation in explant cultures of human fetal gut can also result in villous atrophy and crypt cell hyperplasia. We have, therefore, examined changes that take place in explant cultures of human fetal gut after activation of T cells with anti‐CD3 and/or IFN‐α. We show that activation of T cells with anti‐CD3 alone elicits a small IFN‐γ and TNF‐α response with no tissue injury. Similarly, no changes are seen in explants cultured with IFN‐α alone. However, addition of IFN‐α with anti‐CD3 results in enhanced Th1 response and crypt cell hyperplasia. This is associated with enhanced phosphorylation of STAT1, STAT3, and Fyn, a Src homology tyrosine kinase, which interacts with both TCR and IFN‐α signal components. Together these data indicate that IFN‐α can facilitate activation of Th1‐reactive cells in the gut and drive immunopathology.