The human cytomegalovirus UL111A gene is expressed during latent and productive infections, and it codes for homologs of interleukin-10 (IL-10). We examined whether viral IL-10 expressed during latency altered differentiation of latently infected myeloid progenitors. In comparison to infection with parental virus or mock infection, latent infection with a virus in which the gene encoding viral IL-10 has been deleted upregulated cytokines associated with dendritic cell (DC) formation and increased the proportion of myeloid DCs. These data demonstrate that viral IL-10 restricts the ability of latently infected myeloid progenitors to differentiate into DCs and identifies an immunomodulatory role for viral IL-10 which may limit the host's ability to clear latent virus.