CD33 is a member of the sialic acid-binding immunoglobulin-like lectin (Siglec) family of inhibitory receptors and a therapeutic target for acute myeloid leukemia (AML). CD33 contains a cytoplasmic immunoreceptor tyrosine-based inhibitory motif (ITIM), which can recruit SHP-1 and SHP-2. How CD33 expression is regulated is unclear. Suppressor of cytokine signaling 3 (SOCS3) is expressed in response to cytokines, LPS, and other PAMPs, and competes with SHP-1/2 binding to ITIMs of cytokine receptors, thereby inhibiting signaling. In this study, using peptide pull-down experiments, we found that SOCS3 can specifically bind to the phosphorylated ITIM of CD33. Additionally, following cross-linking SOCS3 can recruit the ECS E3 ligase resulting in accelerated proteasomal degradation of both CD33 and SOCS3. Our data suggest that the tyrosine motifs in CD33 are not important for internalization, while they are required for degradation. Moreover, SOCS3 inhibited the CD33-induced block on cytokine-induced proliferation. This is the first receptor shown to be degraded by SOCS3 and where SOCS3 and its target protein are degraded concomitantly. Our findings clearly suggest that during an inflammatory response, the inhibitory receptor CD33 is lost by this mechanism. Moreover, this has important clinical implications as tumors expressing SOCS3 may be refractory to alpha-CD33 therapy.