Chronic infection with the bacterial pathogen Helicobacter pylori is a risk factor for the development of gastric cancer, yet remains asymptomatic in a majority of individuals. We report here that the C57Bl6 mouse model of experimental infection with the closely related H. felis recapitulates this wide range in host susceptibility. A majority of infected mice develop premalignant lesions such as gastric atrophy, compensatory epithelial hyperplasia and intestinal metaplasia, whereas a minority is completely protected from preneoplasia. Protection is associated with the failure to mount an IFN-gamma response to the infection and an associated high Helicobacter burden. We demonstrate that IFN-gamma is essential for clearance of Helicobacter, but also mediates the formation of preneoplastic lesions. We further provide evidence that IFN-gamma triggers a specific transcriptional program in murine gastric epithelial cells in vitro and in vivo, and induces their preferential transformation to the hyperplastic phenotype. In summary, our data suggest a dual role for IFN-gamma in Helicobacter pathogenesis that could provide an explanation for the differential susceptibility to H. pylori-induced gastric pathology in the human population.