The proinflammatory cytokine interferon-γ (IFN-γ) is well known for its important role in innate and adaptive immunity against intracellular infections and for tumor control. Yet, it has become clear that IFN-γ also has a strong impact on bone marrow (BM) output during inflammation, as it affects the differentiation of most hematopoietic progenitor cells. Here, we review the impact of IFN-γ on hematopoiesis, including the function of hematopoietic stem cells (HSCs) and more downstream progenitors. We discuss which hematopoietic lineages are functionally modulated by IFN-γ and through which underlying molecular mechanism(s). We propose the novel concept that IFN-γ acts through upregulation of suppressor of cytokine signaling molecules, which impairs signaling of several cytokine receptors. IFN-γ has also gained clinical interest from different angles, and we discuss how chronic IFN-γ production can lead to the development of anemia and BM failure and how it is involved in malignant hematopoiesis. Overall, this review illustrates the wide-ranging effect of IFN-γ on the (patho-)physiological processes in the BM.