The ability of IL-10 producing Type 1 regulatory T cells (Tr1) to restrain the activation of effector immune cells during autoimmune responses underscores their essential role in maintaining immune tolerance. While mouse studies have demonstrated that increasing the numbers and/or function of Tr1 cells could improve the course of autoimmune diseases, the inability to generate Tr1 cells in vitro in large numbers has hampered identification of the molecular mechanisms responsible for their differentiation. Interleukin-27 (IL-27), a member of the IL-12 heterodimeric cytokine family, was identified as an important cytokine that suppresses effector T_H17 cells and promotes the generation of Tr1 cells. Tr1 cells dampen autoimmunity and tissue inflammation partly through their secretion of the immunosuppressive cytokine IL-10. Here we review the molecular mechanisms involved in IL-27-induced Tr1 cell differentiation, with a focus on the role of two transcription factors, the aryl hydrocarbon receptor (AhR) and c-Maf. We also discuss how ligands that bind to AhR and affect the biology of IL-27-induced Tr1 cells can be exploited as a therapeutic approach to alleviate human autoimmune diseases.