CD11b(+)Ly-6C(hi) cells, including inflammatory monocytes (IMCs) and inflammatory dendritic cells (IDCs), are important in infectious, autoimmune, and tumor models. However, their role in T cell regulation is controversial. In this article, we show that T cell regulation by IMCs and IDCs is determined by their activation state and is plastic during an immune response. Nonactivated IMCs and IDCs function as APCs, but activated IMCs and IDCs suppress T cells through NO production. Suppressive IMCs are induced by IFN-γ, GM-CSF, TNF-α, and CD154 derived from activated T cells during their interaction. In experimental autoimmune encephalomyelitis, CD11b(+)Ly-6C(hi) cells in the CNS are increasingly activated from disease onset to peak and switch their function from Ag presentation to T cell suppression. Furthermore, transfer of activated IMCs or IDCs enhances T cell apoptosis in the CNS and suppresses experimental autoimmune encephalomyelitis. These data highlight the interplay between innate and adaptive immunity: immunization leads to the expansion of Ly-6C(hi) myeloid cells initially promoting T cell function. As T cells become highly activated in the target tissue, they induce activation and NO production in Ly-6C(hi) myeloid cells, which in turn suppress T cells and lead to the contraction of local immune response.