A novel subset of human regulatory B-cells has recently been described. They arise from within the transitional B-cell subpopulation and are characterised by the production of IL-10. They appear to be of significant importance in regulating T-cell immunity in vivo. Despite this important function, the molecular mechanisms by which they control T-cell activation are incompletely defined. Here we show that transitional B-cells produced more IL-10 and expressed higher levels of IL-10 receptor after CD40 engagement compared to other B-cell subsets. Furthermore, under this stimulatory condition, CD86 expressed by transitional B-cells was down regulated and T-cell proliferation was reduced. We provide evidence to demonstrate that the down-regulation of CD86 expression by transitional B-cells was due to the autocrine effect of IL-10, which in turn leads to decreased T-cell proliferation and TNF-α production. This analysis was further extended to peripheral B-cells in kidney transplant recipients. We observed that B-cells from patients tolerant to the graft maintained higher IL-10 production after CD40 ligation, which correlates with lower CD86 expression compared to patients with chronic rejection. Hence, the results obtained in this study shed light on a new alternative mechanism by which transitional B-cells inhibit T-cell proliferation and cytokine production.