Keratinocytes contribute relevantly to the pathogenesis of inflammatory skin diseases by expressing a variety of proinflammatory molecules, with T cell-derived IFN-gamma being the most potent keratinocyte activator. Suppressor of cytokine signaling (SOCS)1 and SOCS3 are negative regulators of IFN-gamma signaling and are induced in many cell types by IFN-gamma itself or by other cytokines. We show in this work that SOCS1, SOCS2, SOCS3, and cytokine-inducible SH2-containing protein mRNA were up-regulated by IFN-gamma in normal human keratinocytes, whereas only SOCS1 or SOCS1 and cytokine-inducible SH2-containing protein were induced by TNF-alpha or IL-4, respectively. SOCS1, SOCS2, and SOCS3 proteins were undetectable in healthy skin and highly expressed in the epidermis of psoriasis and allergic contact dermatitis, but were only weakly expressed in atopic dermatitis skin. In keratinocytes transiently transfected with SOCS1 or SOCS3 the IFN-gamma-induced transactivation of an IFN-gamma-responsive reporter gene was markedly inhibited. SOCS1 and SOCS3 overexpression in keratinocyte stable clones inhibited IFN-gamma-induced phosphorylation of IFN-gammaR(alpha) and activation of STAT1 and STAT3. Furthermore, SOCS1 and, to a lesser extent, SOCS3 reduced membrane expression of ICAM-1 and HLA-DR, and release of IFN-gamma-inducible protein-10, monokine induced by IFN-gamma, and monocyte chemoattractant protein-1 by keratinocyte clones promoted by IFN-gamma. SOCS1-expressing keratinocytes showed constitutively higher, but not IFN-gamma-inducible, IL-8 levels compared with SOCS2 and SOCS3 clones, and were resistant to IFN-gamma-mediated growth inhibition. Targeting keratinocyte SOCS1 may represent a novel therapeutic approach to IFN-gamma-dependent skin diseases.