In the absence of heparan sulfate the presence of the D1 sequence increases the rate at which IFN-γ-receptor complexes form. Interactions between the D1 cluster of amino acids and the receptor may be the first step in complex formation. By binding to D1 HS may compete with the receptor and prevent active receptor complexes from forming. The biological significance of heparan sulfates interaction with IFN-γ is unclear; however, binding of the D1 cluster to HS may protect it from proteolytic cleavage. Biological activity
IFN-γ is secreted by T helper cells (specifically, Th1 cells), cytotoxic T cells (TC cells), macrophages, mucosal epithelial cells and NK cells. IFN-γ is both an important autocrine signal for professional APCs in early innate immune response, and an important paracrine signal in adaptive immune response. The expression of IFN-γ is induced by the cytokines IL-12, IL-15, IL-18, and type I IFN. IFN-γ is the only Type II interferon and it is serologically distinct from Type I interferons; it is acid-labile, while the type I variants are acid-stable. IFN-γ has antiviral, immunoregulatory, and anti-tumor properties. It alters transcription in up to 30 genes producing a variety of physiological and cellular responses. Among the effects are:

Promotes NK cell activity
Increases antigen presentation and lysosome activity of macrophages.
Interferon gamma (IFN-γ) is a dimerized soluble cytokine that is the only member of the type II class of interferons. The existence of this interferon, which early in its history was known as immune interferon, was described by E. F. Wheelock as a product of human leukocytes stimulated with phytohemagglutinin, and by others as a product of antigen-stimulated lymphocytes. It was also shown to be produced in human lymphocytes. or tuberculin-sensitized mouse peritoneal lymphocytes challenged with Mantoux test (PPD); the resulting supernatants were shown to inhibit growth of vesicular stomatitis virus. Those reports also contained the basic observation underlying the now widely employed IFN-γ release assay used to test for tuberculosis. In humans, the IFN-γ protein is encoded by the IFNG gene. Function
IFN-γ, or type II interferon, is a cytokine that is critical for innate and adaptive immunity against viral, some bacterial and protozoan infections. IFN-γ is an important activator of macrophages and inducer of major histocompatibility complex class II molecule expression. Aberrant IFN-γ expression is associated with a number of autoinflammatory and autoimmune diseases. The importance of IFN-γ in the immune system stems in part from its ability to inhibit viral replication directly, and most importantly from its immunostimulatory and immunomodulatory effects. IFN-γ is produced predominantly by natural killer cells (NK) and natural killer T cells (NKT) as part of the innate immune response, and by CD4 Th1 and CD8 cytotoxic T lymphocyte (CTL) effector T cells once antigen-specific immunity develops as part of the adaptive immune response.