Abstract Suppressor of cytokine signaling 1 (SOCS1) is rapidly induced following stimulation by several cytokines. SOCS1 negatively regulates cytokine receptor signal transduction by inhibiting Janus family tyrosine kinases. Lack of such feedback regulation underlies the premature death of SOCS1−/− mice due to unbridled IFN-γ signaling. We used mouse embryo fibroblasts derived from SOCS1−/− mice to investigate the role of SOCS1 in IFN-γ signaling pathways. SOCS1−/− fibroblasts were exquisitely sensitive to the IFN-γ-mediated growth arrest and showed sustained STAT1 phosphorylation. However, SOCS1−/− fibroblasts were inefficient in MHC class II surface expression following IFN-γ stimulation, despite a marked induction of the MHC class II transactivator and MHC class II gene expression. Retroviral transduction of wild-type SOCS1 relieved the growth-inhibitory effects of IFN-γ in SOCS1−/− fibroblasts by inhibiting STAT1 activation. SOCS1R105K, carrying a mutation within the phosphotyrosine-binding pocket of the Src homology 2 domain, did not inhibit STAT1 phosphorylation, yet considerably inhibited IFN-γ-mediated growth arrest. Strikingly, expression of SOCS1R105K restored the IFN-γ-induced MHC class II expression in SOCS1−/− cells, indicating that expression of SOCS1 facilitates MHC class II expression in fibroblasts. Our results show that SOCS1, in addition to its negative regulatory role of inhibiting Janus kinases, has an unanticipated positive regulatory function in retarding the degradation of IFN-γ-induced MHC class II proteins in fibroblasts.