Effective clearance of apoptotic cells by macrophages is essential for immune homeostasis. The transcriptional pathways that allow macrophages to sense and respond to apoptotic cells are poorly defined. We found that liver X receptor (LXR) signaling was important for both apoptotic cell clearance and the maintenance of immune tolerance. Apoptotic cell engulfment activated LXR and thereby induced the expression of Mer, a receptor tyrosine kinase critical for phagocytosis. LXR-deficient macrophages exhibited a selective defect in phagocytosis of apoptotic cells and an aberrant proinflammatory response to them. As a consequence of these defects, mice lacking LXRs manifested a breakdown in self-tolerance and developed autoantibodies and autoimmune glomerulonephritis. Treatment with an LXR agonist ameliorated disease progression in a mouse model of lupus-like autoimmunity. Thus, activation of LXR by apoptotic cells engages a virtuous cycle that promotes their own clearance and couples engulfment to the suppression of inflammatory pathways.