Disruption of epithelial barrier by proinflammatory cytokines such as IFN-γ represents a major pathophysiological consequence of intestinal inflammation. We have previously shown that IFN-γ increases paracellular permeability in model T84 epithelial cells by inducing endocytosis of tight junction (TJ) proteins occludin, JAM-A, and claudin-1. The present study was designed to dissect mechanisms of IFN-γ-induced endocytosis of epithelial TJ proteins. IFN-γ treatment of T84 cells resulted in internalization of TJ proteins into large actin-coated vacuoles that originated from the apical plasma membrane and resembled the vacuolar apical compartment (VAC) previously observed in epithelial cells that lose cell polarity. The IFN-γ dependent formation of VACs required ATPase activity of a myosin II motor but was not dependent on rapid turnover of F-actin. In addition, activated myosin II was observed to colocalize with VACs after IFN-γ exposure. Pharmacological analyses revealed that formation of VACs and endocytosis of TJ proteins was mediated by Rho-associated kinase (ROCK) but not myosin light chain kinase (MLCK). Furthermore, IFN-γ treatment resulted in activation of Rho GTPase and induced expressional up-regulation of ROCK. These results, for the first time, suggest that IFN-γ induces endocytosis of epithelial TJ proteins via RhoA/ROCK-mediated, myosin II-dependent formation of VACs.