Interleukin-10 (IL-10) plays an important role in prevention of chronic inflammation in vivo. However, the molecular mechanism by which IL-10 exerts its anti-inflammatory response is poorly understood. Here, we performed a microarray analysis and identified Bcl-3 as an IL-10-inducible gene in macrophages. Lentiviral vector-mediated expression of Bcl-3 inhibited lipopolysaccharide (LPS)-induced production of tumor necrosis factor alpha (TNF-alpha), but not IL-6, in macrophages. In Bcl-3-transduced and IL-10-pretreated macrophages, LPS-induced nuclear translocation of nuclear factor kappaB (NF-kappaB) p65 was not impaired. However, DNA binding by NF-kappaB p50/p65 was profoundly inhibited. Nuclear localization of Bcl-3 was associated with inhibition of LPS-induced TNF-alpha production. Overexpression of Bcl-3 suppressed activation of the TNF-alpha promoter, but not the IL-6 promoter. Bcl-3 interacted with NF-kappaB p50 and was recruited to the TNF-alpha promoter, but not the IL-6 promoter, indicating that Bcl-3 facilitates p50-mediated inhibition of TNF-alpha expression. Furthermore, Bcl-3-deficient macrophages showed defective IL-10-mediated suppression of LPS induction of TNF-alpha, but not IL-6. These findings suggest that IL-10-induced Bcl-3 is required for suppression of TNF-alpha production in macrophages.