Dendritic cells (DCs) play a central role in determining the induction of T cell responses. IL-27 production by DCs favors induction of IL-10–producing regulatory T cells, whereas osteopontin (OPN) promotes pathogenic IL-17 T cell responses. The regulatory mechanisms in DCs that control these two cells types are not understood well. Here, we show that IFN-γ induces IL-27 while inhibiting OPN expression in DCs both in vitro and in vivo and that engagement of IFN-γR expressed by DCs leads to suppression of IL-17 production while inducing IL-10 from T cells. DCs modified by IFN-γ acquire IL-27–dependent regulatory function, promote IL-10–mediated T cell tolerance, and suppress autoimmune inflammation. Thus, our results identify a previously unknown pathway by which IFN-γ limits IL-17–mediated autoimmune inflammation through differential regulation of OPN and IL-27 expression in DCs.