Whereas interleukin-6 (IL-6) is a proinflammatory cytokine, IL-10 is an anti-inflammatory cytokine. Although signal transducer and activator of transcription 3 (STAT3) is essential for the function of both IL-6 and IL-10, it is unclear how these two cytokines have such opposing functions. Here we show that suppressor of cytokine signaling 3 (SOCS3) is a key regulator of the divergent action of these two cytokines. In macrophages lacking the Socs3 gene or carrying a mutation of the SOCS3-binding site in gp130, the lipopolysaccharide-induced production of tumor necrosis factor (TNF) and IL-12 is suppressed by both IL-10 and IL-6. SOCS3 specifically prevents activation of STAT3 by IL-6 but not IL-10. Taken together, these data indicate that SOCS3 selectively blocks signaling by IL-6, thereby preventing its ability to inhibit LPS signaling.