Pulmonary Cryptococcus neoformans infection of C57BL/6 mice is an established model of a chronic pulmonary fungal infection accompanied by an “allergic” response (T2) to the infection, ie, a model of an allergic bronchopulmonary mycosis. Our objective was to determine whether IFN-γ plays a role in regulating the pulmonary T2 immune response in C. neoformans-infected C57BL/6 mice. Long-term pulmonary fungistasis was lost in IFN-γ knockout (KO) mice, resulting in an increased pulmonary burden of fungi at wk 3. IFN-γ was required for the early influx of leukocytes into the lungs but was not required later in the infection. By wk 3, eosinophil and macrophage numbers were elevated in the absence of IFN-γ. The inducible NO synthase to arginase ratio was lower in the lungs of IFN-γ KO mice and the macrophages had increased numbers of intracellular cryptococci and YM1 crystals, indicative of alternatively activated macrophages in these mice. There was evidence of pulmonary fibrosis in both wild-type and IFN-γ KO mice by 5 wk postinfection. IFN-γ production was not required for the development of T2 cytokine (IL-4, IL-5, IL-13) producing cells in the lungs and lung-associated lymph nodes or induction of an IgE response. At a number of time points, T2 cytokine production was enhanced in IFN-γ KO mice. Thus, in the absence of IFN-γ, C57BL/6 mice develop an augmented allergic response to C. neoformans, including enhanced generation of alternatively activated macrophages, which is accompanied by a switch from a chronic to a progressive pulmonary cryptococcal infection.