Several human cytomegalovirus (HCMV) genes encode products that modulate cellular functions in a manner likely to enhance viral pathogenesis. This includes UL111A, which encodes homologs of human interleukin-10 (hIL-10). Depending upon signals received, monocytes and macrophages become polarized to either classically activated (M1 proinflammatory) or alternatively activated (M2 anti-inflammatory) subsets. Skewing of polarization toward an M2 subset may benefit the virus by limiting the proinflammatory responses to infection, and so we determined whether HCMV-encoded viral IL-10 influenced monocyte polarization. Recombinant viral IL-10 protein polarized CD14(+) monocytes toward an anti-inflammatory M2 subset with an M2c phenotype, as demonstrated by high expression of CD163 and CD14 and suppression of major histocompatibility complex (MHC) class II. Significantly, in the context of productive HCMV infection, viral IL-10 produced by infected cells polarized uninfected monocytes toward an M2c phenotype. We also assessed the impact of viral IL-10 on heme oxygenase 1 (HO-1), which is an enzyme linked with suppression of inflammatory responses. Polarization of monocytes by viral IL-10 resulted in upregulation of HO-1, and inhibition of HO-1 function resulted in a loss of capacity of viral IL-10 to suppress tumor necrosis factor alpha (TNF-a) and IL-1ß, implicating HO-1 in viral IL-10-induced suppression of proinflammatory cytokines by M2c monocytes. In addition, a functional consequence of monocytes polarized with viral IL-10 was a decreased capacity to activate CD4(+) T cells. This study identifies a novel role for viral IL-10 in driving M2c polarization, which may limit virus clearance by restricting proinflammatory and CD4(+) T cell responses at sites of infection.