Cytomegalovirus (CMV) has highly evolved mechanisms for avoiding detection by the host immune system. Recently, in the genomes of human and primate CMV, a novel gene comprising segments of noncontiguous open reading frames was identified and found to have limited predicted homology to endogenous cellular interleukin-10 (IL-10). Here we investigate the biological activities of the CMV IL-10-like gene product and show it to possess potent immunosuppressive properties. Both purified bacterium-derived recombinant CMV IL-10 and CMV IL-10 expressed in supernatants of human cells were found to inhibit proliferation of mitogen-stimulated peripheral blood mononuclear cells (PBMCs), with specific activity comparable to that of recombinant human IL-10. In addition, CMV IL-10 expressed from human cells inhibited cytokine synthesis, as treatment of stimulated PBMCs and monocytes with CMV IL-10 led to a marked decrease in production of proinflammatory cytokines. Finally, CMV IL-10 was observed to decrease cell surface expression of both major histocompatibility complex (MHC) class I and class II molecules, while conversely increasing expression of the nonclassical MHC allele HLA-G. These results demonstrate for the first time that CMV has a biologically active IL-10 homolog that may contribute to immune evasion during virus infection.