Owing to ongoing recognition of pathogen-associated molecular patterns, immune activation and upregulation of IFN-stimulated genes (ISGs) are sustained in the chronically infected host. Albeit most ISGs are important effectors for containing viral replication, some might exert compensatory immune suppression to limit pathological dysfunctions, although the mechanisms are not fully understood. In this study, we report that the ISG lymphocyte Ag 6 complex, locus E (LY6E) is a negative immune regulator of monocytes. LY6E in monocytes negatively modulated CD14 expression and subsequently dampened the responsiveness to LPS stimulation in vitro. In the setting of chronic HIV infection, the upregulation of LY6E was correlated with reduced CD14 level on monocytes; however, the immunosuppressive effect of LY6E was not adequate to remedy the hyperresponsiveness of activated monocytes. Taken together, the regulatory LY6E pathway in monocytes represents one of negative feedback mechanisms that counterbalance monocyte activation, which might be caused by LPS translocation through the compromised gastrointestinal tract during persistent HIV-1 infection and may serve as a potential target for immune intervention.