Dendritic cells (DC) are sensitive to their local environment and are affected by proximal cell death. This study investigated the modulatory effect of cell death on DC function. Monocyte-derived DC exposed to apoptotic Jurkat or primary T cells failed to induce phenotypic maturation of the DC and were unable to support CD4+ allogeneic T-cell proliferation compared with DC exposed to lipopolysaccharide (LPS) or necrotic cells. Apoptotic cells coincubated with LPS- or necrotic cell-induced mature DC significantly suppressed CD80, CD86 and CD83 and attenuated LPS-induced CD4+ T-cell proliferation. Reduced levels of interleukin-12 (IL-12), IL-10, IL-6, tumour necrosis factor-alpha and interferon-gamma (IFN-gamma) were found to be concomitant with the suppressive activity of apoptotic cells upon DC. Furthermore, intracellular staining confirmed IFN-gamma expression by DC in association with apoptotic environments. The specific generation of IFN-gamma by DC within apoptotic environments is suggestive of an anti-inflammatory role by the induction of indoleamine 2,3-dioxygenase (IDO). Both neutralization of IFN-gamma and IDO blockade demonstrated a role for IFN-gamma and IDO in the suppression of CD4+ T cells. Moreover, we demonstrate that IDO expression within the DC was found to be IFN-gamma-dependent. Blocking transforming growth factor-beta (TGF-beta) also produced a partial release in T-cell proliferation. Our study strongly suggests that apoptosis-induced DC suppression is not an immunological null event and two prime mediators underpinning these functional effects are IFN-gamma-induced IDO and TGF-beta.