Interferon-γ (IFN-γ) is critical for innate and adaptive immunity against viral and bacterial infections. IFN-γ reportedly affects the phagocytic ability of monocytes and macrophages as well as regulates pituitary function in humans and mice. The present study analyzed the impact of IFN-γ on monocyte and macrophage phagocytosis, production performance, and pituitary function in vivo and in vitro (in dwarf chickens). IFN-γ was injected into dwarf chickens through a vein, and then, the laying rate, average egg weight, and levels of follicle-stimulating hormone (FSH) and IFN-γ were measured in treatment and control groups. For the in vitro experiment, the pituitary tissues were supplemented with IFN-γ, and the mRNA expression levels of follicle-stimulating hormone beta subunit (FSH-β), interferon gamma receptor 1 (IFNGR1), and interferon gamma receptor 2 (IFNGR2) in the pituitary were assessed. Monocyte and macrophage phagocytosis product (PP) was decreased by IFN-γ treatment in a dose-dependent manner in vitro. In the in vivo experiment, the level of IFN-γ in the treatment group was higher than that in the control group at 7 d (P < 0.05), 14 d (P < 0.01), and 21 d (P < 0.01) post-injection. Compared with the control group, monocyte and macrophage PP was lower in the treatment group after injection (P < 0.01). The laying rate was higher in the treatment group than in the control group at 2 and 3 wk post-injection (P < 0.05). There was a significant difference between the treatment and control groups in the levels of FSH at 1, 3, 7, and 14 d post-injection (P < 0.01). In the in vitro experiment, increased mRNA expression levels of FSH-β, IFNGR1, and IFNGR2 were observed in the treatment group after stimulation with 100 U/mL IFN-γ for 24 h compared to those in the control group (P < 0.05). IFN-γ inhibited the phagocytosis of monocytes and macrophages; up-regulated the mRNA expression levels of the FSH-β, IFNGR1, and IFNGR2; enhanced the secretion of FSH; and improved the laying rate. IFN-γ might be an important regulator in the trade-off between the immune effect and production performance in dwarf chickens.