The inhibitory receptor T-cell immunoglobulin and mucin domain-3 (Tim-3) has emerged as a critical regulator of the T-cell dysfunction that develops in chronic viral infections and cancers. However, little is known regarding the signalling pathways that drive Tim-3 expression. Here, we demonstrate that interleukin (IL)-27 induces nuclear factor, interleukin 3 regulated (NFIL3), which promotes permissive chromatin remodelling of the Tim-3 locus and induces Tim-3 expression together with the immunosuppressive cytokine IL-10. We further show that the IL-27/NFIL3 signalling axis is crucial for the induction of Tim-3 in vivo. IL-27-conditioned T helper 1 cells exhibit reduced effector function and are poor mediators of intestinal inflammation. This inhibitory effect is NFIL3 dependent. In contrast, tumour-infiltrating lymphocytes from IL-27R^−/− mice exhibit reduced NFIL3, less Tim-3 expression and failure to develop dysfunctional phenotype, resulting in better tumour growth control. Thus, our data identify an IL-27/NFIL3 signalling axis as a key regulator of effector T-cell responses via induction of Tim-3, IL-10 and T-cell dysfunction.