We recently showed a therapeutic effect of bone marrow-derived dendritic cells (DCs) retrovirally transduced with IL-4 in murine collagen-induced arthritis, a Th1-mediated autoimmune disease. We have now further investigated the functional characteristics of these engineered cells. We hypothesized that the ability of DCs to regulate the type of immune response may depend in part on their capacity to produce IL-12 and IL-23. IL-4-transduced DCs produced increased levels of IL-12p70 following ligation of CD40. Quantitative mRNA analysis revealed that IL-4-transduced DCs expressed higher levels of IL-12p35 mRNA, but lower levels of mRNA for IL-23p19 and the common subunit p40 found in both IL-12 and IL-23, compared with control DCs. Thus, expression of the IL-12 and IL-23 subunits is differentially regulated in IL-4-transduced DCs. Similar results were obtained using in vitro differentiated myeloid DCs cultured in 10–50 ng/ml IL-4. IL-4 led to diminished secretion of IL-23 protein after activation of these cells by CD40 ligand. In vivo studies demonstrated that IL-4-transduced, antigen-pulsed DCs led to lower antigen-specific T-cell production of IFN-γ. Delayed type hypersensitivity induced by IL-4-transduced antigen-pulsed DCs was diminished compared with control DCs. Our results indicate that therapeutic suppression of Th1-mediated autoimmunity and induction of Th2 responses in vivo by IL-4-transduced DCs occurs despite their potential to produce increased levels of IL-12, but reflects, in part, decreased production of IL-23.