Dendritic cells (DCs) are believed to regulate T cell-mediated immunity primarily by directing differentiation of naive T cells. Here, we show that a large fraction of CD4(+) memory cells produce IL-10 within the first hours after interaction with plasmacytoid DCs (PDCs). In contrast, CD11c(+) DCs induce IFN-gamma and little IL-10. IL-10-secreting T cells isolated after 36 hours of culture with PDCs suppressed antigen-induced T-cell proliferation by an IL-10-dependent mechanism, but were distinct from natural and type 1 regulatory T cells. They proliferated strongly and continued to secrete IL-10 during expansion with PDCs, and after restimulation with immature monocyte-derived DCs or CD11c(+) DCs. The IL-10-producing T cells acquired the ability to secrete high levels of IFN-gamma after isolation and subsequent coculture with PDCs or CD11c(+) DCs. Compared to CD11c(+) DCs, PDCs were superior in their ability to selectively expand T cells that produced cytokines on repeated antigenic challenge. The DC-dependent differences in cytokine profiles were observed with viral recall antigen or staphylococcal enterotoxin B and were independent of extracellular type I interferon or IL-10. Our results show that DCs can regulate memory responses and that PDCs rapidly induce regulatory cytokines in effector T cells that can suppress bystander activity.