The intestinal immune system must elicit robust immunity against harmful pathogens but must also restrain immune responses directed against commensal microbes and dietary antigens. The mechanisms that maintain this dichotomy are poorly understood. Here we describe a population of CD11b+F4/80+CD11c- macrophages in the lamina propria that expressed several anti-inflammatory molecules, including interleukin 10 (IL-10), but little or no proinflammatory cytokines, even after stimulation with Toll-like receptor ligands. These macrophages induced, by a mechanism dependent on IL-10, retinoic acid and exogenous transforming growth factor-beta, the differentiation of Foxp3+ regulatory T cells. In contrast, lamina propria CD11b+ dendritic cells elicited IL-17 production. This IL-17 production was suppressed by lamina propria macrophages, indicating that a dynamic interaction between these subsets may influence the balance between immune activation and tolerance.