Visceral leishmaniasis (VL), caused by Leishmania donovani, is a major health concern in India. It represents T-helper type 2 (Th2) bias of cytokines in active state and Th1 bias at cure. However, the role of the parasite in regulating Toll-like receptor (TLR)-mediated macrophage activation in VL patients remains elusive. In this report, we demonstrated that later stages of L. donovani infection rendered tolerance to macrophages, leading to incapability for the production of inflammatory cytokines like tumor necrosis factor (TNF)-α and interleukin (IL)-1β in response to TLR stimulation. Overexpression of transforming growth factor (TGF)-β(1), but not IL-10, resulted in suppressed lipopolysaccharide (LPS)-induced production of TNF-α and downregulation of TLR4 expression in L. donovani-infected macrophages. Recombinant human (rh)TGF-β(1) markedly enhanced tyrosine phosphatase (Src homology region 2 domain-containing phosphatase-1) activity, but inhibited IL-1 receptor-activated kinase (IRAK)-1 activation. Addition of neutralizing TGF-β(1) antibody reversed these effects, and thus suggesting the pivotal role of TGF-β(1) in promoting refractoriness for LPS in macrophages. Surprisingly, the use of a tyrosine phosphatase inhibitor (sodium orthovanadate, Na(3)VO(4)) promoted IRAK-1 activation, confirming the negative inhibitory role of tyrosine phosphatase in macrophage activation. Furthermore, rhTGF-β(1) induced tolerance in infected macrophages by reducing inhibitory protein (IκBα) degradation in a time-dependent manner. In addition, short interfering RNA studies proved that overexpression of A20 ubiquitin-editing protein complex induced inhibitory activity of TGF-β(1) on LPS-mediated nuclear factor-κB activation. Thus, these findings suggest that TGF-β(1) promotes overexpression of A20 through tyrosine phosphatase activity that ensures transient activation of inflammatory signaling pathways in macrophages in active L. donovani infection.