Monocytes in patients with systemic lupus erythematosus (SLE) are hyperstimulatory for T lymphocytes. We previously found that the normal program for expression of a negative costimulatory molecule programmed death ligand-1 (PD-L1) is defective in SLE patients with active disease. Here, we investigated the mechanism for PD-L1 dysregulation on lupus monocytes. We found that PD-L1 expression on cultured SLE monocytes correlated with TNF-α expression. Exogenous TNF-α restored PD-L1 expression on lupus monocytes. Conversely, TGF-β inversely correlated with PD-L1 in SLE and suppressed expression of PD-L1 on healthy monocytes. Therefore, PD-L1 expression in monocytes is regulated by opposing actions of TNF-α and TGF-β. As PD-L1 functions to fine tune lymphocyte activation, dysregulation of cytokines resulting in reduced expression could lead to loss of peripheral T cell tolerance.