C1q, the first component of complement, and leukocyte-associated Ig-like receptor 1 (LAIR-1; CD305), an inhibitory receptor expressed on hematopoietic cells, have both been associated with arrest of monocyte-derived dendritic cell (DC) differentiation and inhibition of Toll-like receptor activity in plasmacytoid DCs. Defects in both molecules have been implicated in susceptibility to, and progression of, systemic lupus erythematosus. Inhibitory signaling partners for C1q on monocytes and DCs remain undefined. Because C1q contains collagen-like motifs and LAIR-1 is a universal collagen receptor, we hypothesized that C1q is a functional ligand for LAIR-1. Binding analyses in cell-free systems and on the cell membrane demonstrate that C1q and its collagen tail associate with LAIR-1 and LAIR-2 (CD306), a soluble inhibitor of LAIR-1. Both C1q and its collagen tail trigger phosphorylation of LAIR-1 immunoreceptor tyrosine-based inhibitory motifs (ITIMs) in monocytes. Functional analyses show that C1q-mediated inhibition of monocyte-DC differentiation and C1q-mediated inhibition of IFN-α production by plasmacytoid DCs were both reversed by LAIR-2. Moreover, C1q-mediated inhibition of DC differentiation was reversed by LAIR-1 siRNA. Thus, C1q is a functional ligand for LAIR-1 restricting immune cell differentiation and activation. The discovery of C1q interactions with LAIR-1 and LAIR-2 lends much needed insight into molecular mechanisms operating to prevent the loss of tolerance, particularly in systemic lupus erythematosus.autoimmunity | immunologic tolerance