Heme oxygenase (HO)-1 and its metabolic product carbon monoxide (CO) play regulatory roles in acute inflammatory states. In this study, we demonstrate that CO administration is effective as a therapeutic modality in mice with established chronic colitis. CO administration ameliorates chronic intestinal inflammation in a T helper (Th)1-mediated model of murine colitis, interleukin (IL)-10–deficient (IL-10^−/−) mice. In Th1-mediated inflammation, CO abrogates the synergistic effect of interferon (IFN)-γ on lipopolysaccharide-induced IL-12 p40 in murine macrophages and alters IFN-γ signaling by inhibiting a member of the IFN regulatory factor (IRF) family of transcription factors, IRF-8. A specific signaling pathway, not previously identified, is delineated that involves an obligatory role for HO-1 induction in the protection afforded by CO. Moreover, CO antagonizes the inhibitory effect of IFN-γ on HO-1 expression in macrophages. In macrophages and in Th1-mediated colitis, pharmacologic induction of HO-1 recapitulates the immunosuppressive effects of CO. In conclusion, this study begins to elucidate potential etiologic and therapeutic implications of CO and the HO-1 pathway in chronic inflammatory bowel diseases.