Interleukin-10 (IL-10) is an anti-inflammatory cytokine that plays an important role in regulating the local inflammatory immune response, but regulatory mechanisms of this cytokine have not been fully elucidated. Here, we demonstrate that IL-10 deficiency renders LPS treatment ineffective in regulating the expression of CD40, CD80, CD86, B7-H2, and B7-DC on dendritic cells (DCs) and blocks upregulation of IL-27. This inability to respond to LPS was found in both IL-10−/− bone marrow derived and splenic DCs. Compared with wild-type DCs, IL-10−/– DCs expressed similar levels of TLR4 and CD14, but produced less LPS-binding protein. The deficiency in LPS-binding protein production may explain the failure of IL-10−/− DCs to respond normally to LPS. Moreover, lack of IL-10 modulated the proportions of CD11c+CD8+ and CD11c+B220+ DCs, which play an important role in local inflammatory responses and tolerance. IL-10 deficiency also blocked expression of galectin-1, CD205, and CD103, which are necessary for central and peripheral tolerance. While they did not respond to LPS, IL-10−/− DCs produced increased levels of IL-6 and CCL4 after TNF-α treatment. Together, our results demonstrate that IL-10 deficiency affects the immune functions of DCs, which may contribute to the increased severity of autoimmune diseases seen in IL-10−/− mice.