Retinal pigment epithelium (RPE) cell damage is implicated in the pathogenesis of age‐related macular degeneration (AMD). An increase of interferon‐γ (IFN‐γ) levels was observed in patients with AMD, but whether inflammatory factors are causally related to AMD progression is unclear. Here, we demonstrate a direct causal relationship between IFN‐γ and RPE cell death. IFN‐γ induced human retinal pigment epithelial cell (ARPE‐19) death accompanied by increases in Fe2+, reactive oxygen species, lipid peroxidation, and glutathione (GSH) depletion, which are main characteristics of ferroptosis. Mechanistically, IFN‐γ upregulates the level of intracellular Fe2+ through inhibiting Fe2+ efflux protein SLC40A1 and induces GSH depletion by blocking cystine/glutamate antiporter, System xc‐. At the same time, treatment with IFN‐γ decreases the level of glutathione peroxidase 4 (GPx4), rendering the cells more sensitive to ferroptosis. JAK1/2 and STAT1 inhibitors could reverse the reduction of SLC7A11, GPx4 and GSH expression induced by IFN‐γ, indicating IFN‐γ induces ARPE‐19 cell ferroptosis via activation of the JAK1‐2/STAT1/SLC7A11 signaling pathway. The above results were largely confirmed in IFN‐γ‐treated mice in vivo. Finally, we used sodium iodate (NaIO3)‐induced retinal degeneration to further explore the role of ferroptosis in AMD in vivo. Consistent with the role of IFN‐γ, treatment with NaIO3 decreased SLC7A11, GPx4 and SLC40A1 expressions. NaIO3‐induced RPE damage was accompanied by increased iron, lipid peroxidation products (4‐hydroxynonenal, malondialdehyde), and GSH depletion, and ferroptosis inhibitors could reverse the above phenomenon. Taken together, our findings suggest that inhibiting ferroptosis or reducing IFN‐γ may serve as a promising target for AMD. IFN‐γ downregulates the expression of SLC7A11 via JAK1‐2/STAT1 signaling pathway, which results in decreases in cysteine transport and, subsequently, decreased GSH synthesis. Simultaneously, IFN‐γ increases intracellular Fe2+ levels through the inhibition of SLC40A1. GSH depletion and Fe2+ accumulation cause retinal pigment epithelial cells ferroptosis and accelerate the progression of AMD.