Vascular endothelial growth factor-C (VEGF-C)-induced lymphangiogenesis and increased tissue drainage have been reported to inhibit acute and chronic inflammation, and an activated lymphatic endothelium might mediate peripheral tolerance. Using transgenic mice overexpressing VEGF-C in the skin, we found that under inflammatory conditions, VEGF-C-mediated expansion of the cutaneous lymphatic network establishes an immune-inhibitory microenvironment characterised by increased regulatory T (Treg) cells, immature CD11c+ CD11b+ dendritic cells (DCs) and CD8+ cells exhibiting decreased effector function. Strikingly, lymphatic endothelial cell (LEC)-conditioned media (CM) potently suppress DC maturation with reduced expression of MHCII, CD40, and IL-6, and increased IL-10 and CCL2 expression. We identify an imbalance in prostaglandin synthase expression after LEC activation, favoring anti-inflammatory prostacyclin synthesis. Importantly, blockade of LEC prostaglandin synthesis partially restores DC maturity. LECs also produce TGF-β1, contributing to the immune-inhibitory microenvironment. This study identifies novel mechanisms by which the lymphatic endothelium modulates cellular immune responses to limit inflammation.