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A growing body of evidence shows that induction of long term transplant survival by “costimulation blockade” (CoB) regimens is impaired by inflammatory responses. In particular, multiple studies reported that engagement of toll like receptors (TLR) abrogate the tolerogenic effect of CoB. Despite the identification of type-1 interferons (TI-IFN) as mediators of this effect in multiple models, the target population and specific pathway used by TI-IFN to induce this effect, remain unknown. CoB therapies rely on the enhancement of the frequency and suppressive activity of regulatory T cells (Tregs) that use interleukin 10 (IL-10) as a key weapon of suppression. IL-10 is a pleiotropic and immunomodulatory cytokine that in the field of transplant tolerance, despite its anticipated protective function, maintains a controversial role. To better understand how an inflammatory environment, more specifically IFN-β, could interfere with the induction of transplant tolerance, we studied its impact on the immunomodulatory properties of IL-10.Our results showed that the transient blockade of IL-10 signaling had a deleterious impact on the ability of a CoB regimen based on the infusion of donor specific transfusion (DST) and anti-CD154 (MR-1), to prolong the survival of murine full mismatch skin transplants (MST 105d vs 47d with anti-IL-10R administration). Following 48h of in vitro incubation with IFN-β, memory T cells (Tmem) and Tregs presented a dramatic defect in the production of phospho-STAT3 in response to IL-10. This effect was very selective, as IL-6 signaling (post IFN-β exposure) induced normal levels of phospho-STAT3. The reduced accumulation of phospho-STAT3 in conditioned cells resulted in the inhibition of the upregulation of mRNAs for LIGHT, Sphk1 and Tarm-1 – three genes we have discovered are induced by IL-10 in T cells. Encouragingly, this inhibition of IL-10 signaling is slowly reversible with the removal of TI-IFN. Microarray and flow cytometry data indicated that this IL-10-specific unresponsiveness was not associated with any reduction of IL-10 receptor expression or an increase in SOCS (Suppressor of Cytokine Signaling) 1 and 3, nor with reduced STAT3 cytoplasmic availability. Instead, this analysis suggested a novel role for the transcription factor STAT1 in dampening IL-10 signaling. Using T cells from STAT1-KO mice, we show that the absence of STAT1 prevented IL-10 inhibition induced by IFN-β in Treg and Tmem, supporting our new model.Overall, these results highlight the importance of IL-10 signaling in the therapeutic effect of CoB regimens in transplantation. More importantly, they reveal a new molecular mechanism whereby IFN-β interferes with IL-10 signaling, its suppressive function in T cells, and ultimately with regulation of alloreactivity. Identifying a strategy to target this mechanism will be a powerful tool to improve the efficacy of immunomodulatory strategies for transplant tolerance induction.AAI 2016-2017 Careers in Immunology Fellowship. JDRF strategic research agreement 2-SRA-2016-310-S-B.