Occlusive transplant vasculopathy (TV) is the major cause for chronic graft rejection. Since endothelial cells (EC) are the first graft cells encountered by activated host lymphocytes, it is important to delineate the molecular mechanisms that coordinate the interaction of EC with activated T cells. Here, the interaction of CD8(+) T cells with Ag-presenting EC in vivo was examined using a transgenic heart transplantation model with beta-galactosidase (beta-gal) expression exclusively in EC (Tie2-LacZ hearts). We found that priming with beta-gal peptide-loaded DC failed to generate a strong systemic IFN-gamma response, but elicited pronounced TV in both IFN-gamma receptor (IFNGR)-competent, and ifngr(-/-) Tie2-LacZ hearts. In contrast, stimulation of EC-specific CD8(+) T cells with beta-gal-recombinant mouse cytomegalovirus (MCMV-LacZ) in recipients of ifngr(+/+) Tie2-LacZ hearts did not precipitate significant TV. However, MCMV-LacZ infection of recipients of ifngr(-/-) Tie2-LacZ hearts led to massive activation of beta-gal-specific CD8 T cells, and led to development of fulminant TV. Further analyses revealed that the strong systemic IFN-gamma "storm" associated with MCMV infection induced upregulation of programmed death-1 ligand 1 (PD-L1) on EC, and subsequent attenuation of programmed death-1 (PD-1)-expressing EC-specific CD8(+) T cells. Thus, IFNGR signaling in ECs activates a potent peripheral negative feedback circuit that protects vascularized grafts from occlusive TV.