Type II IFN (IFN-γ) is a proinflammatory T lymphocyte cytokine that serves in priming of microglia—resident CNS macrophages—during the complex microglial activation process under pathological conditions. Priming generally permits an exaggerated microglial response to a secondary inflammatory stimulus. The impact of primed microglia on physiological neuronal function in intact cortical tissue (in situ) is widely unknown, however. We explored the effects of chronic IFN-γ exposure on microglia in hippocampal slice cultures, i.e., postnatal parenchyma lacking leukocyte infiltration (adaptive immunity). We focused on fast neuronal network waves in the gamma-band (30–70 Hz). Such gamma oscillations are fundamental to higher brain functions, such as perception, attention, and memory, and are exquisitely sensitive to metabolic and oxidative stress. IFN-γ induced substantial morphological changes and cell population expansion in microglia as well as moderate up-regulation of activation markers, MHC-II, CD86, IL-6, and inducible nitric oxide synthase (iNOS), but not TNF-α. Cytoarchitecture and morphology of pyramidal neurons and parvalbumin-positive inhibitory interneurons were well-preserved. Notably, gamma oscillations showed a specific decline in frequency of up to 8 Hz, which was not mimicked by IFN-α or IL-17 exposure. The rhythm disturbance was caused by moderate microglial nitric oxide (NO) release demonstrated by pharmacological microglia depletion and iNOS inhibition. In conclusion, IFN-γ priming induces substantial proliferation and moderate activation of microglia that is capable of slowing neural information processing. This mechanism might contribute to cognitive impairment in chronic brain disease featuring elevated IFN-γ levels, blood–brain barrier leakage, and/or T cell infiltration, well before neurodegeneration occurs.