Cytokine polymorphisms are associated with disease outcome and interferon (IFN) treatment response in hepatitis C virus (HCV) infection. We genotyped eight SNPs spanning the entire IFN-gamma gene in two cohorts and assessed the association between those polymorphisms and treatment response or spontaneous viral clearance. The first cohort was composed of 284 chronically HCV-infected patients who had received IFN-alpha-based therapy and the second was 251 i.v. drug users who had either spontaneously cleared HCV or become chronically infected. A SNP variant located in the proximal IFN-gamma promoter region next to the binding motif of heat shock transcription factor (HSF), -764G, was significantly associated with sustained virological response [P = 0.04, odds ratio (OR) = 3.51 (confidence interval 1.0-12.5)]. The association was independently significant in multiple logistic regression (P = 0.04) along with race, viral titer, and genotype. This variant was also significantly associated with spontaneous recovery [P = 0.04, OR = 3.51 (1.0-12.5)] in the second cohort. Functional analyses show that the G allele confers a two- to three-fold higher promoter activity and stronger binding affinity to HSF1 than the C allele. Our study suggests that the IFN-gamma promoter SNP -764G/C is functionally important in determining viral clearance and treatment response in HCV-infected patients and may be used as a genetic marker to predict sustained virological response in HCV-infected patients.