BACKGROUND: Polyglutamine diseases constitute a class of neurodegenerative disorders associated with expansion of the cytosine-adenine-guanine (CAG) triplet, in protein coding genes. Expansion of a polyglutamine tract in the N-terminal of TBP is the causal mutation in SCA17. Brain sections of patients with spinocerebellar ataxia 17 (SCA17), a type of neurodegenerative disease, have been reported to contain protein aggregates of TATA-binding protein (TBP). It is also implicated in other neurodegenerative diseases like Huntington's disease, since the protein aggregates formed in such diseases also contain TBP. Dysregulation of miR-29a/b is another common feature of neurodegenerative diseases including Alzheimer's disease, Huntington's disease, and SCA17. Using a cellular model of SCA17, we identified key connections in the molecular pathway from protein aggregation to miRNA dysregulation. METHODS: Gene expression profiling was performed subsequent to the expression of TBP containing polyglutamine in a cellular model of SCA17. We studied the expression of STAT1 and other interferon-gamma dependent genes in neuronal apoptosis. The molecular pathway leading to the dysregulation of miRNA in response of protein aggregation and interferon release was investigated using RNAi-mediated knockdown of STAT1. RESULTS: We show that the accumulation of polyglutamine-TBP in the cells results in interferon-gamma release which in turn signals through STAT1 leading to downregulation of miR-29a/b. We propose that the release of interferons by cells harboring toxic protein aggregates may trigger a bystander effect resulting in loss of neurons. Interferon-gamma also led to upregulation of miR-322 although this effect is not mediated through STAT1. CONCLUSIONS: Our investigation shows that neuroinflammation could be an important player in mediating the transcriptional dysregulation of miRNA and the subsequent apoptotic effect of toxic polyglutamine-TBP. The involvement of immunomodulators in polyglutamine diseases holds special therapeutic relevance in the light of recent findings that interferon-gamma can modulate behavior.