Systemic lupus erythematosus (SLE) is a chronic autoimmune disease characterized by abnormal function of both the innate and the adaptive immune system, leading to a loss of tolerance to self-antigens. Monocytes are a key component of the innate immune system and are efficient producers of multiple cytokines. In SLE, inappropriate activation of monocytes is thought to contribute to the loss of self-tolerance. In this study, we demonstrate that type 1 interferon (IFN) production by CpG-challenged monocytes can be suppressed by C1q through activating leukocyte-associated Ig-like receptor-1 (LAIR-1), which contains immunoreceptor tyrosine-based inhibition motifs (ITIMs). The phosphorylation of LAIR-1 and the interaction of LAIR-1 with SH2 domain-containing protein tyrosine phosphatase-1 (SHP-1) were enhanced after LAIR-1 engagement by C1q. Moreover, engagement of LAIR-1 by C1q inhibited nuclear translocation of interferon regulatory factor (IRF)-3 and IRF5 in CpG-stimulated monocytes. These data suggest a model in which LAIR-1 engagement by C1q helps maintain monocyte tolerance, specifically with respect to Toll-like receptor-9-mediated monocyte activation.