T-cell activation is regulated by binding of ligands on APC to corresponding receptors on T cells. In mice, we discovered that binding of DC-HIL on APC to syndecan-4 (SD-4) on activated T cells potently inhibits T-cell activation. In humans, we now show that DC-HIL also binds to SD-4 on activated T cells through recognition of its heparinase-sensitive saccharide moiety. DC-HIL blocks anti-CD3-induced T-cell responses, reducing secretion of pro-inflammatory cytokines and blocking entry into the S phase of the cell cycle. Binding of DC-HIL phosphorylates SD-4's intracellular tyrosine and serine residues. Anti-SD-4 Ab mimics the ability of DC-HIL to attenuate anti-CD3 response more potently than Ab directed against other inhibitory receptors (CTLA-4 or programmed cell death-1). Among leukocytes, DC-HIL is expressed highest by CD14(+) monocytes and this expression can be upregulated markedly by TGF-beta. Among APC, DC-HIL is expressed highest by epidermal Langerhans cells, an immature type of dendritic cells. Finally, the level of DC-HIL expression on CD14(+) monocytes correlates inversely with allostimulatory capacity, such that treatment with TGF-beta reduced this capacity, whereas knocking down the DC-HIL gene augmented it. Our findings indicate that the DC-HIL/SD-4 pathway can be manipulated to treat T-cell-driven disorders in humans.