The "liver tolerance effect" has been attributed to a unique potential of liver-resident nonprofessional APCs including hepatocytes (HCs) to suppress T cell responses. The exact molecular mechanism of T cell suppression by liver APCs is still largely unknown. In mice, IL-10-dependent T cell suppression is observed after Th1-mediated hepatitis induced by Con A. In this study, we show that HCs, particularly those from regenerating livers of Con A-pretreated mice, induced a regulatory phenotype in naive CD4(+) T cells in vitro. Using reporter mice, we observed that these T regulatory cells released substantial amounts of IL-10, produced IFN-γ, failed to express Foxp3, but suppressed proliferation of responder T cells upon restimulation with anti-CD3 mAb. Hence, these regulatory cells feature a similar phenotype as the recently described IL-10-producing Th1 cells, which are generated upon activation of Notch signaling. Indeed, inhibition of γ-secretase and a disintegrin and metalloproteinase 17 but not a disintegrin and metalloproteinase 10, respectively, which blocked Notch activation, prevented IL-10 secretion. HCs from Con A-pretreated mice showed enhanced expression of the Notch ligand Jagged1 and significantly increased receptor density of Notch1 on CD4(+) T cells. However, HCs from Con A-pretreated IFN regulatory factor 1(-/-) mice, which cannot respond to IFN-γ, as well as those from IFN-γ(-/-) mice failed to augment IL-10 production by CD4(+) T cells. In conclusion, it seems that HCs fine-tune liver inflammation by upregulation of Jagged1 and activation of Notch signaling in Th1 cells. This mechanism might be of particular importance in the regenerating liver subsequent to Th1-mediated hepatitis.