Plasmacytoid dendritic cells (pDCs) produce copious type I interferon (IFN) upon sensing nucleic acids through Toll-like receptor (TLR) 7 and TLR9. Uncontrolled pDC activation and IFN production are implicated in lymphopenia and autoimmune diseases; therefore, a mechanism controlling pDC IFN production is essential. Human pDCs specifically express an orphan receptor, immunoglobulin-like transcript 7 (ILT7). Here, we discovered an ILT7 ligand expressed by human cell lines and identified it as bone marrow stromal cell antigen 2 (BST2; CD317). BST2 directly binds to purified ILT7 protein, initiates signaling via the ILT7-FcepsilonRIgamma complex, and strongly inhibits production of IFN and proinflammatory cytokines by pDCs. Readily induced by IFN and other proinflammatory cytokines, BST2 may modulate the human pDC's IFN responses through ILT7 in a negative feedback fashion.