Tight regulation of the inflammatory response is essential for the maintenance of physiologic homeostasis. A potentially important mediator of this process is CD163, a macrophage-specific member of the scavenger receptor cysteine-rich family. CD163 surface expression is up-regulated by glucocorticoids and the anti-inflammatory cytokine interleukin-10, and CD163 is shed acutely from the cell surface in response to lipopolysaccharide. We now demonstrate that transforming growth factor-beta (TGF-beta) markedly reduces expression of CD163. Treatment of primary human monocytes with TGF-beta inhibited basal as well as dexamethasone-induced CD163 mRNA and protein expression. De novo protein synthesis was not required for this inhibition, suggesting that TGF-beta regulates CD163 expression transcriptionally. To delineate this transcriptional regulation, a 2.5-kb fragment of the CD163 promoter was isolated. This promoter was inhibited by TGF-beta, and suppression was dependent on Smad3 expression. These results define a novel function for TGF-beta and implicate an important role for CD163 in the host response to inflammation.