Interleukin-10 (IL-10) is an important immunomodulatory cytokine, which has attracted much attention because of its anti-inflammatory properties. It reduces antigen presentation and inhibits T cell activation. IL-10-treated myeloid cells lose their ability to respond toward the endotoxin lipopolysaccharide (LPS) with the production of several proinflammatory mediators. Thereby, IL-10 limits excessive inflammatory reactions in response to endotoxin as it occurs in colitis or endotoxin shock. Mice can be tolerized toward endotoxin shock when pretreated with a sublethal dose of LPS. This can be mimicked in vitro as LPS desensitization, resulting in a similar LPS hyporesponsiveness as observed with IL-10 pretreatment. However, an early block in LPS signaling characterizes LPS desensitization, whereas IL-10 seems to target late events. Controversial reports have been published where IL-10 would interfere with the induction of proinflammatory mediators, and little is known about the molecular mechanisms behind the anti-inflammatory activities of IL-10. Some recent publications have tried to gain more insight into the molecular mechanism of IL-10 by gene-expression profiling and functional studies in myeloid-derived cells. These results are reviewed here and compared with the progress that has been made to understand the induction of endotoxin tolerance by LPS itself.