Hypersensitivity pneumonitis (HP) is an inflammatory lung disease characterized by granuloma formation. We recently showed that interferon-γ (IFN-γ) is essential for inflammation and granuloma formation in HP. Interleukin-10 (IL-10) counteracts many of the biologic effects of IFN-γ, suggesting that IL-10 modulates inflammation and granuloma formation in HP. We compared the expression of HP in C57BL/6 mice that lack IL-10 (IL-10 knockout [KO]) with that in wild-type (WT) littermates. IL-10 KO and WT mice were exposed to the thermophilic bacteria Saccharopolyspora rectivirgula or to saline alone for 3 wk. The IL-10 KO mice had higher cell counts in their bronchoalveolar lavage fluid (2.85 ± 0.43 × 106) than did WT mice (1.4 ± 0.3 × 106/ml; P < 0.03), with a more prominent neutrophil response. They also had greater inflammation after antigen exposure than did the WT mice (P < 0.0001). There was increased upregulation of IFN-γ, IL-1, and tumor necrosis factor-α (TNF-α) mRNAs in the lungs of IL-10 KO mice. Adenovirus-mediated gene transfer of IL-10 to the liver of IL-10 KO mice reduced the inflammation from that seen in WT mice. These studies show that IL-10 has important anti-inflammatory properties in HP, and that lack of this cytokine leads to a more severe granulomatous inflammatory response.