Dendritic cells (DCs) sense environmental cues and adopt either an immune-stimulatory or regulatory phenotype, thereby fine-tuning immune responses. Identifying endogenous regulators that determine DC function can thus inform the development of therapeutic strategies for modulating the immune response in different disease contexts. Tim-3 plays an important role in regulating immune responses by inhibiting the activation status and the T cell priming ability of DC in the setting of cancer. Bat3 is an adaptor protein that binds to the tail of Tim-3; therefore, we studied its role in regulating the functional status of DCs. In murine models of autoimmunity (experimental autoimmune encephalomyelitis) and cancer (MC38-OVA-implanted tumor), lack of Bat3 expression in DCs alters the T cell compartment-it decreases TH1, TH17 and cytotoxic effector cells, increases regulatory T cells, and exhausted CD8+ tumor-infiltrating lymphocytes, resulting in the attenuation of autoimmunity and acceleration of tumor growth. We found that Bat3 expression levels were differentially regulated by activating versus inhibitory stimuli in DCs, indicating a role for Bat3 in the functional calibration of DC phenotypes. Mechanistically, loss of Bat3 in DCs led to hyperactive unfolded protein response and redirected acetyl-coenzyme A to increase cell intrinsic steroidogenesis. The enhanced steroidogenesis in Bat3-deficient DC suppressed T cell response in a paracrine manner. Our findings identified Bat3 as an endogenous regulator of DC function, which has implications for DC-based immunotherapies.