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Elevated levels of systemic IL-10 have been associated with several chronic viral infections, including HCV, EBV, HCMV and LCMV. In the chronic LCMV infection model, both elevated IL-10 and enhanced infection of dendritic cells (DCs) are important for viral persistence. This report highlights the relationship between enhanced viral tropism for DCs and the induction of IL-10 in CD4 T cells, which we identify as the most frequent IL-10-expressing cell type in chronic LCMV infection. Here we report that infected CD8αneg DCs express elevated IL-10, induce IL-10 expression in LCMV specific CD4 T cells, and suppress LCMV-specific T cell proliferation. DCs exposed in vivo to persistent LCMV retain the capacity to stimulate CD4 T cell proliferation but induce IL-10 production by both polyclonal and LCMV-specific CD4 T cells. Our study delineates the unique effects of direct infection versus viral exposure on DCs. Collectively these data point to enhanced infection of DCs as a key trigger of the IL-10 induction cascade resulting in maintenance of elevated IL-10 expression in CD4 T cells and inhibition of LCMV-specific CD4 and CD8 T cell proliferation.