Phagocytosis of apoptotic cells usually results in an anti-inflammatory state with inhibition of proinflammatory cytokines such as IL-12. How apoptotic cell-derived signals regulate IL-12 gene expression is not understood. We demonstrate that cell-cell contact with apoptotic cells is sufficient to induce profound inhibition of IL-12 production by activated macrophages. Phosphatidylserine could mimic the inhibitory effect. The inhibition does not involve autocrine or paracrine actions of IL-10 and TGF-beta. We report the identification, purification, and cloning of a novel zinc finger nuclear factor, named GC binding protein (GC-BP), that is induced following phagocytosis of apoptotic cells by macrophages or by treatment with phosphatidylserine. GC-BP selectively inhibits IL-12 p35 gene transcription by binding to its promoter in vitro and in vivo, thus decreasing IL-12 production. Blocking GC-BP by RNA interference restores IL-12 p35 transcription and IL-12 p70 synthesis. Finally, GC-BP itself undergoes functionally significant tyrosine dephosphorylation in response to apoptotic cells.