Costimulation blockade (CoB)-based immunotherapy is a promising alternative to immunosuppression for transplant recipients; however, the current limited understanding of the factors that impact its efficacy restrains its clinical applicability. In this context, pro- and anti-inflammatory cytokines are being recognized as having an impact on T cell activation beyond effector differentiation. This study aims at elucidating the impact of direct IL-10 signaling in T cells on CoB outcomes. We used a full-mismatch skin transplantation model where recipients had a T cell-restricted expression of a dominant negative IL-10 receptor (10R-DN), alongside anti-CD154 as CoB therapy. Unlike wild-type recipients, 10R-DN mice failed to benefit from CoB. This accelerated graft rejection correlated with increased accumulation of T cells producing TNF-α, IFN-γ, and IL-17. In vitro experiments indicated that while lack of IL-10 signaling did not change the ability of anti-CD154 to modulate alloreactive T cell proliferation, the absence of this pathway heightened TH1 effector cell differentiation. Furthermore, deficiency of IL-10 signaling in T cells impaired Treg induction, a hallmark of anti-CD154 therapy. Overall, these findings unveil an important and novel role of IL-10 signaling in T cells that defines the success of CoB therapies and identifies a target pathway for obtaining robust immunoregulation.