Because hematopoietic cells derived from Fanconi anemia (FA) patients of the C-complementation group (FA-C) are hypersensitive to the inhibitory effects of interferon γ (IFNγ), the products of certain IFNγ-inducible genes known to influence hematopoietic cell survival were quantified. High constitutive expression of the IFNγ-inducible genes, IFN-stimulated gene factor 3 gamma subunit (ISGF3γ), IFN regulatory factor-1 (IRF-1), and the cyclin-dependent kinase inhibitor p21^WAF1 was found inFANCC mutant B lymphoblasts, low-density bone marrow cells, and murine embryonic fibroblasts. Paradoxically, these cells do not activate signal transducer and activator of transcription (STAT) 1 properly. In an attempt to clarify mechanisms by which FA-C cells overexpress IFNγ-inducible genes in the face of defective STAT1 phosphorylation, it was reasoned that decreased levels of activated STAT1 might result in reduced expression of a hematopoietic IFNγ-responsive protein that normally modulates expression of other IFNγ-responsive genes. Levels of the IFNγ-inducible factor IFN consensus sequence binding protein (ICSBP), a negative trans-acting regulator of some IFNγ-inducible genes, were quantified. ICSBP levels were reduced in FA-C B lymphoblasts and MEFs. However, enforced expression of ICSBP failed to down-regulate IRF-1, ISGF3γ, and p21^WAF1. Thus, the FANCC protein functions to modulate expression of a family of genes that in normal cells are inducible only by specific environmental cues for apoptosis or mitogenic inhibition, but it does so independently of the classic IFN-STAT1 pathway and is not the direct result of reduced ICSBP expression.