Uncontrolled interferon γ (IFNγ)-mediated T-cell responses to commensal microbiota are a driver of inflammatory bowel disease (IBD). Interleukin-10 (IL-10) is crucial for controlling these T-cell responses, but the precise mechanism of inhibition remains unclear. A better understanding of how IL-10 exerts its suppressive function may allow identification of individuals with suboptimal IL-10 function among the heterogeneous population of IBD patients. Using cells from patients with an IL10RA deficiency or STAT3 mutations, we demonstrate that IL-10 signaling in monocyte-derived dendritic cells (moDCs), but not T cells, is essential for controlling IFNγ-secreting CD4 T cells. Deficiency in IL-10 signaling dramatically increased IL-1β release by moDCs. IL-1β boosted IFNγ secretion by CD4 T cells either directly or indirectly by stimulating moDCs to secrete IL-12. As predicted a signature of IL-10 dysfunction was observed in a subgroup of pediatric IBD patients having higher IL-1β expression in activated immune cells and macroscopically affected intestinal tissue. In agreement, reduced IL10RA expression was detected in peripheral blood mononuclear cells and a subgroup of pediatric IBD patients exhibited diminished IL-10 responsiveness. Our data unveil an important mechanism by which IL-10 controls IFNγ-secreting CD4 T cells in humans and identifies IL-1β as a potential classifier for a subgroup of IBD patients.