Interferon gamma (IFNγ) is central to the inflammatory immune response, such as that entrained by BCG immunotherapy for bladder cancer. However, immune-mediated tumour cell killing is subject to modulation by immunoinhibitory “checkpoint” receptors such as PD-L1. We investigated the effects of IFNγ on barrier-forming in vitro-differentiated normal human urothelium using mRNA-sequencing, and showed canonical upregulation of MHC class I/II and de novo expression of the T cell tropic CXCL9-11 chemokines. Normal urothelium constitutively expressed immunoinhibitory B7 family member VSIR (VISTA), while CD274 (PD-L1) expression was induced/upregulated by IFNγ. We generated a urothelial IFNγ response gene signature. When applied to the unsupervised clustering of non-muscle-invasive bladder cancers, the IFNγ-signature predicted longer recurrence-free survival. In muscle-invasive cancers, the IFNγ-signature split the basal/squamous consensus subtype, with significantly worse overall survival when weak or absent. This study offers novel insights into strategies to enhance immunotherapy via the IFNγ and VISTA/PD-L1 nexus.