Major histocompatibility complex (MHC) class II molecules expressed on monocytes may play a role in the control of differentiation of antigen-presenting cells. A soluble LAG-3 (CD223) molecule (sLAG-3) is a natural, high-affinity ligand for MHC class II. It is known to induce maturation of monocyte-derived dendritic cells in vitro and is used as a vaccine adjuvant to induce CD4 T helper type 1 responses and CD8 T-cell responses in vivo. Here, we demonstrate that sLAG-3 (but not an MHC class II-specific monoclonal antibody) reduces the differentiation of monocytes into macrophages in the presence of granulocyte-macrophage colony-stimulating factor (GM-CSF) as well as their differentiation into dendritic cells in the presence of GM-CSF and interleukin-4, as shown by a decrease in CD14 and CD1a expression, respectively. Dendritic cells derived from monocytes in the presence of sLAG-3 showed impaired antigen-presentation function, as assessed by the reduced capability to induce proliferation of T cells. Our results suggest that activated LAG-3(+) lymphocytes present at sites of inflammation may reduce the differentiation of monocytes into macrophages or fully competent antigen-presenting dendritic cells, thus limiting the magnitude of the ongoing T-cell immune responses.