To determine the role of IL-10 in cutaneous leishmaniasis, we examined lesion development following Leishmania major infection of genetically susceptible BALB/c mice lacking IL-10. Whereas normal BALB/c mice developed progressive nonhealing lesions with numerous parasites within them, IL-10(-/-) BALB/c mice controlled disease progression, and had relatively small lesions with 1000-fold fewer parasites within them by the fifth week of infection. We also examined a mechanism whereby Leishmania induced the production of IL-10 from macrophages. We show that surface IgG on Leishmania amastigotes allows them to ligate Fc gamma receptors on inflammatory macrophages to preferentially induce the production of high amounts of IL-10. The IL-10 produced by infected macrophages prevented macrophage activation and diminished their production of IL-12 and TNF-alpha. In vitro survival assays confirmed the importance of IL-10 in preventing parasite killing by activated macrophages. Pretreatment of monolayers with either rIL-10 or supernatants from amastigote-infected macrophages resulted in a dramatic enhancement in parasite intracellular survival. These studies indicate that amastigotes of Leishmania use an unusual and unexpected virulence factor, host IgG. This IgG allows amastigotes to exploit the antiinflammatory effects of Fc gamma R ligation to induce the production of IL-10, which renders macrophages refractory to the activating effects of IFN-gamma.