We identified two siblings homozygous for a single base pair deletion in the IFN-γR2 transmembrane domain (791delG) who presented with multifocal Mycobacterium abscessus osteomyelitis (patient 1) and disseminated CMV and Mycobacterium avium complex infection (patient 2), respectively. Although the patients showed no IFN-γR activity, their healthy heterozygous parents showed only partial IFN-γR activity. An HLA-identical bone marrow transplant from the mother led patient 1 to complete hemopoietic reconstitution, but only partial IFN-γR function. We cloned and expressed fluorescent fusion proteins of the wild-type IFN-γR2, an IFN-γR2 mutant previously described to produce a complete autosomal recessive deficiency (278del2), and of 791delG to determine whether the intermediate phenotype in the 791delG heterozygous state was caused by haploinsufficiency or a dominant negative effect. When cotransfected together with the wild-type vector into IFN-γR2-deficient fibroblasts, the fusion protein with 791delG inhibited IFN-γR function by 48.7±5%, whereas fusion proteins with 278del2 had no inhibitory effect. Confocal microscopy of 791delG fusion proteins showed aberrant diffuse intracellular accumulation without plasma membrane localization. The fusion protein created by 791delG did not complete Golgi processing, and was neither expressed on the plasma membrane, nor shed extracellularly. The mutant construct 791delG exerts dominant negative effects on IFN-γ signaling without cell surface display, suggesting that it is acting on pathways other than those involved in cell surface recognition of ligand.