Dendritic cells (DCs) are important players in the regulation of Th1- and Th2-dominated immune responses. In these studies we showed that IFN-γ, the key mediator of Th1 immunity, actively suppressed the production of IL-10 in murine DCs when activated with LPS or CpG. Our analysis revealed that both LPS and CpG induced IL-10 and IL-12 production but that the presence of IFN-γ, in a dose-dependent manner, suppressed the production of IL-10 while enhancing that of IL-12. The observed inhibition of IL-10 production was independent of IL-12. Experiments performed with STAT-1 knockout mice demonstrated that the primary production of IL-12 induced by CpG was STAT-1 dependent, whereas the production of IL-10 was not. This finding was confirmed by the observation that CpG-induced IL-12 production could be inhibited by anti-IFN-β Abs, whereas CpG-induced IL-10 production could not be inhibited. These data also demonstrated that the inhibitory effect of IFN-γ on IL-10 expression was STAT-1 dependent and transcriptionally regulated. Thus, DCs respond to CpG by producing proinflammatory and anti-inflammatory cytokines such as IL-12 and IL-10, respectively, and IFN-γ acts to not only enhance IL-12 but also to inhibit IL-10 production. The current data demonstrate a novel pathway for IFN-γ-mediated immunoregulation and suggest that IFN-γ-dependent suppression of IL-10 production by DCs may be involved in the antagonism between Th1 and Th2 patterns of immune reactivity.