IL-10 is an immunomodulatory cytokine that regulates inflammatory responses of mononuclear phagocytes (monocytes and macrophages). Mononuclear cells exposed to microbes or microbial products secrete a host of proinflammatory cytokines followed by delayed onset of anti-inflammatory IL-10. IL-10 suppresses immune responses by inhibiting cytokine production by mononuclear phagocytes. Using THP-1, a human promonocytic leukemia cell line, we show that endotoxin/lipopolysaccharide (LPS) exposure induces IL10 expression while IFN-gamma blocks this LPS-mediated effect. IFN-gamma is an important modulator of IL-10 production during infectious diseases. We show that LPS and IFN-gamma regulate IL10 expression in THP-1 cells in part through posttranscriptional mechanisms. Our results demonstrate that 3'-untranslated region (3'-UTR) AU-rich elements (AREs) decrease expression of a chimeric luciferase reporter gene in THP-1 cells. The ARE-binding protein AUF1 binds the IL10 3'-UTR. Depletion of AUF1 by RNAi suppresses LPS-mediated induction of IL10 mRNA and protein without affecting LPS-mediated stabilization of IL10 mRNA. Upon complementation with either RNAi-refractory p37 or p40 AUF1 plasmids, only p40 restores LPS-mediated induction of IL10 mRNA and protein to near normal levels. Thus, the p40 AUF1 isoform selectively plays a critical, positive role in IL10 expression upon LPS exposure.