Periodontal ligament (PDL) cells help maintain tissue homeostasis by balancing tissue inflammation and regeneration. However, the mechanisms by which interferon γ (IFNγ) modulates this process are not yet fully understood.The present study aimed to examine the effect of primed and unprimed PDL cells with IFNγ on the viability and differentiation of T lymphocytes and its functional consequences. The results showed that IFNγ-primed PDL cells possessed enhanced immunosuppression by suppressing T lymphocyte viability and directing T lymphocyte differentiation towards a higher Th2/Th1 ratio. Suppression of T cell viability was mainly mediated by IFNγ-inducible secreted mediators, which was prevented in the presence of direct cell contact, likely by intercellular adhesion molecule-1 (ICAM-1)-induced PI3K-mediated TGFβ1 expression in PDL cells. In contrast, ICAM-1 activation augmented IFNγ-induced IFNγ and IL-6 expression in PDL cells, which in turn modulated T cell differentiation. The resulting interaction between these two cell types activated macrophage and suppressed osteoclast differentiation. In conclusion, the results have shown, for the first time, that primed and unprimed PDL cells with IFNγ differentially control T cell responses via IFNγ-inducible mediators and ICAM-1-mediated direct cell contact, suggesting the role of PDL cells in shifting an inflammatory phase towards a regenerative phase.