IL-27 is a novel IL-6/IL-12 family cytokine that not only plays a role in the early regulation of Th1 differentiation, but also exerts an inhibitory effect on immune responses, including the suppression of proinflammatory cytokine production. However, the molecular mechanism by which IL-27 exerts the inhibitory effect remains unclear. In this study we demonstrate that IL-27 inhibits CD28-mediated IL-2 production and that suppressor of cytokine signaling 3 (SOCS3) plays a critical role in the inhibitory effect. Although IL-27 enhanced IFN-gamma production from naive CD4+ T cells stimulated with plate-coated anti-CD3 and anti-CD28 in the presence of IL-12, IL-27 simultaneously inhibited CD28-mediated IL-2 production. Correlated with the inhibition, IL-27 was shown to augment SOCS3 expression. Analyses using various mice lacking a signaling molecule revealed that the inhibition of IL-2 production was dependent on STAT1, but not on STAT3, STAT4, and T-bet, and was highly correlated with the induction of SOCS3 expression. Similar inhibition of CD28-mediated IL-2 production and augmentation of SOCS3 expression by IL-27 were observed in a T cell hybridoma cell line, 2B4. Forced expression of antisense SOCS3 or dominant negative SOCS3 in the T cell line blocked the IL-27-inudced inhibition of CD28-mediated IL-2 production. Furthermore, pretreatment with IL-27 inhibited IL-2-mediated cell proliferation and STAT5 activation, although IL-27 hardly affected the induction level of CD25 expression. These results suggest that IL-27 inhibits CD28-mediated IL-2 production and also IL-2 responses, and that SOCS3, whose expression is induced by IL-27, plays a critical role in the inhibitory effect in a negative feedback mechanism.