Excessive inflammation occurs during infection and autoimmunity in mice lacking the alpha-subunit of the interleukin 27 (IL-27) receptor. The molecular mechanisms underlying this increased inflammation are incompletely understood. Here we report that IL-27 upregulated IL-10 in effector T cells that produced interferon-gamma and expressed the transcription factor T-bet but did not express the transcription factor Foxp3. These IFN-gamma+T-bet+Foxp3- cells resembled effector T cells that have been identified as the main source of host-protective IL-10 during inflammation. IL-27-induced production of IL-10 was associated with less secretion of IL-17, and exogenous IL-27 reduced the severity of adoptively transferred experimental autoimmune encephalomyelitis by a mechanism dependent on IL-10. Our data show that IL-27-induced production of IL-10 by effector T cells contributes to the immunomodulatory function of IL-27.