Resident microbiota activate regulatory cells that modulate intestinal inflammation and promote and maintain intestinal homeostasis. IL-10 is a key mediator of immune regulatory function. Our studies described the functional importance and mechanisms by which gut microbiota and specific microbial components influenced the development of intestinal IL-10-producing B cells. We used fecal transplant to germ-free (GF) Il10+/EGFP reporter and Il10-/- mice to demonstrate that microbiota from specific pathogen-free mice primarily stimulated IL-10-producing colon-specific B cells and T regulatory-1 cells in ex-GF mice. IL-10 in turn down-regulated microbiota-activated mucosal inflammatory cytokines. TLR2/9 ligands and enteric bacterial lysates preferentially induced IL-10 production and regulatory capacity of intestinal B cells. Analysis of Il10+/EGFP mice crossed with additional gene-deficient strains and B cell co-transfer studies demonstrated that microbiota-induced IL-10-producing intestinal B cells ameliorated chronic T cell-mediated colitis in a TLR2, MyD88 and PI3K-dependent fashion. In vitro studies implicated PI3Kp110δ and AKT downstream signaling. These studies demonstrated that resident enteric bacteria activated intestinal IL-10-producing B cells through TLR2, MyD88 and PI3K pathways. These B cells reduced colonic T cell activation and maintained mucosal homeostasis in response to intestinal microbiota.