Interleukin (IL)-10 and glucocorticoids (GCs) inhibit the ability of antigen-presenting dendritic cells (DCs) to stimulate T lymphocytes. We show that induction of GILZ (GC-induced leucine zipper) is involved in this phenomenon. IL-10, dexamethasone (DEX), and transforming growth factor (TGF)β stimulate GILZ production in human immature DCs derived from monocytes and from CD34⁺ cells. GILZ is necessary and sufficient for DEX, IL-10, and TGFβ modulation of CD80, CD83, CD86, immunoglobulin-like transcript (ILT)-3, and B7-H1 expression by DCs, and alteration of DC functions. GILZ stimulates the production of IL-10 by immature DCs and prevents the production of inflammatory chemokines by CD40L-activated DCs. In contrast, GILZ does not prevent CD40 ligand-mediated inhibition of phagocytosis, indicating that it affects some but not all aspects of DC maturation. GILZ prevents DCs from activating antigen-specific T lymphocyte responses. Administration of GCs to patients stimulates GILZ expression in their circulating antigen-presenting cells, and this contributes to the weak lymphocyte responses of GC-treated patients. Thus, regulation of GILZ expression is an important factor determining the decision of DCs whether or not to stimulate T lymphocytes, and IL-10, GCs, and TGFβ share this mechanism for influencing DC functions and the balance between immune response and tolerance.