The pro-inflammatory cytokine interferon-gamma (IFNγ) 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 IFNγ 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 IFNγ on hematopoiesis, including the function of hematopoietic stem cells (HSCs) and more downstream progenitors. We discuss which hematopoietic lineages are functionally modulated by IFNγ and through which underlying molecular mechanism(s). We propose the novel concept that IFNγ acts through upregulation of suppressor of cytokine signaling (SOCS) molecules, which impairs signaling of several cytokine receptors. IFNγ has also gained clinical interest from different angles and we discuss how chronic IFNγ 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 IFNγ on the (patho-)physiological processes in the BM.