CD8 T cells are necessary for costimulation blockade-resistant rejection. However, the mechanism by which CD8 T cells mediate rejection in the absence of major costimulatory signals is poorly understood. IFN-gamma promotes CD8 T cell-mediated immune responses, but IFN-gamma-deficient mice show early graft loss despite costimulation blockade. In contrast, we found that IFN-gamma receptor knockout mice show dramatically prolonged graft survival under costimulation blockade. To investigate this paradox, we addressed the effects of IFN-gamma on T cell alloresponses in vivo independent of the effects of IFN-gamma on graft survival. We identified a donor-specific CD8 T cell breakthrough response temporally correlated with costimulation blockade-resistant rejection. Neither IFN-gamma receptor knockout recipients nor IFN-gamma-deficient recipients showed a CD8 breakthrough response. Graft death on IFN-gamma-deficient recipients despite costimulation blockade could be explained by the lack of IFN-gamma available to act on the graft. Indeed, the presence of IFN-gamma was necessary for graft survival on IFN-gamma receptor knockout recipients, as either IFN-gamma neutralization or the lack of the IFN-gamma receptor on the graft precipitated early graft loss. Thus, IFN-gamma is required both for the recipient to mount a donor-specific CD8 T cell response under costimulation blockade as well as for the graft to survive after allotransplantation.