Abstract IL-21 promotes Th17 differentiation, and Th17 cells that upregulate T-bet, IFN-γ, and GM-CSF drive experimental autoimmune diseases in mice. Anti–IL-21 treatment of autoimmune patients is therefore a therapeutic option, but the role of IL-21 in human T cell differentiation is incompletely understood. IL-21 was produced at high levels by human CD4+ central memory T cells, suggesting that it is associated with early T cell differentiation. Consistently, it was inhibited by forced expression of T-bet or RORC2, the lineage-defining transcription factors of Th1 and Th17 effector cells, respectively. Although IL-21 was efficiently induced by IL-12 in naive CD4+ T cells, it inhibited the generation of Th1 effector cells in a negative feedback loop. IL-21 was also induced by IL-6 and promoted Th17 differentiation, but it was not absolutely required. Importantly, however, IL-21 promoted IL-10 secretion but inhibited IFN-γ and GM-CSF production in developing Th17 cells, and consequently prevented the generation of polyfunctional Th1/17 effector cells. Moreover, in Th17 memory cells, IL-21 selectively inhibited T-bet upregulation and GM-CSF production. In summary, IL-21 is a central memory T cell–associated cytokine that promotes Th17 differentiation and IL-10 production, but inhibits the generation of potentially pathogenic Th1/17 effector cells. These findings shed new light on the role of IL-21 in T cell differentiation, and have relevant implications for anti–IL-21 therapy of autoimmune diseases.