Abstract Neuroinflammation is an established factor contributing to amyotrophic lateral sclerosis (ALS) pathology, implicating the possible detrimental effects of inflammatory cytokines on motor neurons. The RNA/DNA-binding protein TDP-43 has emerged as a pivotal actor in ALS, because TDP-43 mutations cause familial ALS and loss of nuclear TDP-43, associated with its redistribution into cytoplasmic aggregates (TDP-43 proteinopathy) in motor neurons occurs in 97% of ALS cases. However, mechanisms linking neuroinflammation to TDP-43 mislocalization have not been described. Programmed death-ligand 1 (PD-L1) is an immune-modulatory protein, highly expressed on cell surfaces following acute inflammatory stress. To determine which inflammatory cytokines might impact motor neuron function, seven cytokines known to be elevated in ALS patients’ cerebrospinal fluid were tested for their effects on PD-L1 expression in human iPSC-derived motor neurons. Among the tested cytokines, only interferon-γ (IFN-γ) was found to strongly promote PD-L1 expression. Thus, we hypothesized that excessive exposure to IFN-γ may contribute to motor neuron degeneration in ALS. We observed that neuronal populations exposed to IFN-γ exhibited severe TDP-43 cytoplasmic aggregation and excitotoxic behavior correlated with impaired neural firing activity, hallmarks of ALS pathology, in both normal and ALS mutant (TARDB1K+/-) neurons. Single-cell RNA sequencing revealed possible mechanisms for these effects. Motor neurons exposed to IFN-γ exhibited an extensive shift of their gene expression profile toward a neurodegenerative phenotype. Notably, IFN-γ treatment induced aberrant expression levels for 70 genes that are listed in the recent literature as being dysregulated in various ALS subtypes. Additionally, we found that genes related to neuronal electrophysiology, protein aggregation, and TDP-43 misregulation were abnormally expressed in IFN-γ treated cells. Moreover, IFN-γ induced a significant reduction in the expression of genes that encode indispensable proteins for neuromuscular synapse development and maintenance, implying that the continuous cytokine exposure could directly impair signal transmission between motor axons and muscle membranes. Our findings suggest that IFN-γ could be a potent upstream pathogenic driver of ALS and provide potential candidates for future therapeutic targets to treat sporadic forms of ALS, which account for roughly 90% of reported cases.