Interleukin (IL)-27 is a key immunosuppressive cytokine that counters T helper 17 (Th17) cell-mediated pathology. To identify mechanisms by which IL-27 might exert its immunosuppressive effect, we analyzed genes in T cells rapidly induced by IL-27. We found that IL-27 priming of naïve T cells upregulated expression of programmed death ligand 1 (PD-L1) in a signal transducer and activator of transcription (STAT)1-dependent manner. When co-cultured with naïve CD4+ T cells, IL-27-primed T cells inhibited the differentiation of Th17 cells in trans through a PD-1-PD-L1 interaction. In vivo, co-administration of naïve TCR transgenic T cells (2D2 T cells) with IL-27-primed T cells expressing PD-L1 inhibited the development of Th17 cells and protected from severe autoimmune encephalomyelitis. Thus, these data identify a suppressive activity of IL-27, by which CD4+ T cells can restrict differentiation of Th17 cells in trans.