Dendritic cells (DCs) are key players in the development of immunity. They can direct both the size and the quality of an immune response and thus are attractive tools to mediate immunotherapy. DC function has been thought to reflect the cells' maturation, with immunosuppressive agents such as IL-10 understood to retain DCs in an immature and tolerogenic state. Here we report that DC activated in the presence of IL-10 do show functional and phenotypic maturation. Their activation is transient and occurs earlier and more briefly than in cells matured with LPS alone. Despite initially equivalent up-regulation of surface MHC and co-stimulation, the IL-10-treated DCs expressed little IL-12 and failed to stimulate T cell proliferation both in vitro and in vivo. Interaction with IL-10-treated DCs rendered antigen-specific T cells unresponsive to subsequent challenge and their injection reduced the severity of experimental autoimmune disease. Our data suggest that IL-10 acts not by inhibiting maturation but instead by controlling the kinetics and the quality of DC activation. This alternative pathway of DC differentiation offers significant therapeutic promise.