Intravenous immunoglobulin (IVIg) has been used in the treatment of several autoimmune and inflammatory diseases. However, its mechanism of action remains incompletely understood. Here, we investigated the possibility that IVIg induces its anti-inflammatory effects through activating Fcγ receptors bearing an immunoreceptor tyrosine-based activation motif (ITAM) in the FcRγ signaling adaptor. Recently, the concept of inhibitory ITAM (ITAMi) has emerged as a new means to negatively control the immune response. We found that interaction of FcRγ-associated mouse or human FcγRIII with uncomplexed IgG1 or IVIg, or with bivalent anti-FcγRIII F(ab′)₂ reduced calcium responses, reactive oxygen species production, endocytosis, and phagocytosis, induced by heterologous activating receptors on monocyte/macrophages and FcγRIII⁺ transfectants. Inhibition required the ITAMi configuration of the FcγRIII-associated FcRγ subunit and SHP-1 recruitment involving formation of intracellular “inhibisome” clusters containing FcγRIII, and the targeted heterologous activating receptor. IVIg as well as anti-FcγRIII treatments controlled the development of nonimmune mediated inflammation in vivo independently of FcγRIIB. These results demonstrate that circulating immunoglobulins (Ig)Gs are not functionally inert but act through continuous interaction with FcγRIII-inducing ITAMi signaling to maintain immune homeostasis. These data support a new mechanism of action for IVIg and demonstrate the therapeutic potential of FcγRIIIA targeting in inflammation.