Interleukin-10 (IL-10) inhibits antigen-specific T cell responses when human monocytes are used as antigen-presenting cells. This is correlated with a down-regulation of MHC class II molecules on the surface of the monocyte. Here we show that IL-10 does not affect MHC class II transcription, polypeptide synthesis, subunit assembly, or antigenic peptide loading. Instead, newly synthesized mature MHC class II molecules are localized to the MHC class II loading compartment but are prevented from reaching the plasma membrane. In addition, treatment of monocytes with IL-10 leads to an accumulation of internalized MHC class II complexes in intracellular vesicles. These results indicate that IL-10 affects antigen presentation by regulating MHC exocytosis and recycling.