Costimulation between T cells and antigen-presenting cells is required for adaptive immune responses. CD40, a costimulatory molecule, is expressed in macrophages and microglia. The aberrant expression of CD40 is involved in human diseases including multiple sclerosis, rheumatoid arthritis, and Alzheimer's disease. CD40 expression is induced by a variety of stimuli, including IFN-γ and lipopolysaccharide (LPS). In this study, we describe the molecular basis by which IFN-β, a cytokine with immunomodulatory properties, regulates CD40 gene expression. IFN-β induces CD40 expression in macrophages and microglia at the transcriptional level, and GAS elements in the CD40 promoter are required for IFN-β-induced CD40 promoter activity. The critical role of signal transducers and activators of transcription-1α (STAT-1α) in this response was confirmed by utilizing primary microglia from STAT-1α deficient mice. IFN-β induces suppressor of cytokine signaling-1 (SOCS-1) gene expression, which inhibits cytokine signaling by inhibiting activation of STAT proteins. The ectopic expression of SOCS-1 abrogates IFN-β-mediated STAT-1α activation and inhibits IFN-β-induced CD40 expression. IFN-β-induced recruitment of STAT-1α and RNA Pol II and permissive histone modifications on the CD40 promoter are also inhibited by SOCS-1 overexpression. These novel results indicate that IFN-β-induced SOCS-1 plays an important role in the negative regulation of IFN-β-induced CD40 gene expression. © FASEB.