Despite their common ability to activate intracellular signaling through CD80/CD86 molecules, cytotoxic T lymphocyte antigen 4 (CTLA-4)-Ig and CD28-Ig bias the downstream response in opposite directions, the latter promoting immunity, and CTLA-4-Ig tolerance, in dendritic cells (DCs) with opposite but flexible programs of antigen presentation. Nevertheless, in the absence of suppressor of cytokine signaling 3 (SOCS3), CD28-Ig—and the associated, dominant IL-6 response—become immunosuppressive and mimic the effect of CTLA-4-Ig, including a high functional expression of the tolerogenic enzyme indoleamine 2,3-dioxygenase (IDO). Here we show that forced SOCS3 expression antagonized CTLA-4-Ig activity in a proteasome-dependent fashion. Unrecognized by previous studies, IDO appeared to possess two tyrosine residues within two distinct putative immunoreceptor tyrosine-based inhibitory motifs, VPY₁₁₅CEL and LLY₂₅₃EGV. We found that SOCS3—known to interact with phosphotyrosine-containing peptides and be selectively induced by CD28-Ig/IL-6—would bind IDO and target the IDO/SOCS3 complex for ubiquitination and subsequent proteasomal degradation. This event accounted for the ability of CD28-Ig and IL-6 to convert otherwise tolerogenic, IDO-competent DCs into immunogenic cells. Thus onset of immunity in response to antigen within an early inflammatory context requires that IDO be degraded in tolerogenic DCs. In addition to identifying SOCS3 as a candidate signature for mouse DC subsets programmed to direct immunity, this study demonstrates that IDO undergoes regulatory proteolysis in response to immunogenic stimuli.