In the course of gene array studies aimed at identifying IFN-stimulated genes associated with interferon beta (IFN-beta)-induced apoptosis, we identified X-linked inhibitor of apoptosis-associated factor-1 (XAF1) as a novel IFN-stimulated gene. XAF1 mRNA was up-regulated by IFN-alpha and IFN-beta in all cells examined. However, IFNs induced high levels of XAF1 protein predominantly in cell lines sensitive to the proapoptotic effects of IFN-beta. In apoptosis-resistant cells including WM164 melanoma, WM35 melanoma, U937 pro-monocytic leukemia, and HT1080 fibrosarcoma cells, XAF1 mRNA was strongly up-regulated but XAF1 protein was up-regulated only weakly or not at all. Tumor necrosis factor-related apoptosis-inducing ligand (TRAIL) is a critical mediator of IFN-beta-induced apoptosis, but most melanoma cell lines were resistant to recombinant TRAIL protein. For example, A375 melanoma cells were defective in TRAIL induction by IFN-beta and were resistant to TRAIL-induced apoptosis. However, IFN-beta pretreatment sensitized them to subsequent recombinant TRAIL-induced apoptosis. A375 cells expressing XAF1 constitutively were more sensitive to TRAIL-induced apoptosis compared with empty vector-transfected cells. The degree of sensitization by XAF1 was similar to that provided by IFN pretreatment and was correlated with the level of XAF1 expressed. Furthermore, the overexpression of the zinc-finger portion of XAF1 blocked IFN-dependent sensitization of A375 melanoma cells to the proapoptotic effects of TRAIL. These results suggested that IFN-dependent induction of XAF1 strongly influenced cellular sensitivity to the proapoptotic actions of TRAIL.