Interleukin-10 (IL-10) is a potent deactivator of myeloid cells that limits the intensity and duration of immune and inflammatory responses. The activity of IL-10 can be suppressed during inflammation, infection, or after allogeneic tissue transplantation. We investigated whether inflammatory factors suppress IL-10 activity at the level of signal transduction. Out of many factors tested, only ligation of Fc receptors by immune complexes inhibited IL-10 activation of the Jak-Stat signaling pathway. IL-10 signaling was suppressed in rheumatoid arthritis joint macrophages that are exposed to immune complexes in vivo. Activation of macrophages with interferon-gamma was required for Fc receptor-mediated suppression of IL-10 signaling, which resulted in diminished activation of IL-10-inducible genes and reversal of IL-10-dependent suppression of cytokine production. The mechanism of inhibition involved decreased cell surface IL-10 receptor expression and Jak1 activation and was dependent on protein kinase C delta. These results establish that IL-10 signaling is regulated during inflammation and identify Fc receptors and interferon-gamma as important regulators of IL-10 activity. Generation of macrophages refractory to IL-10 can contribute to pathogenesis of inflammatory and infectious diseases characterized by production of interferon-gamma and immune complexes.