Mycobacterium tuberculosis bacteria are known to suppress proinflammatory cytokines like IL-12 and TNF-α for a biased Th2 response that favors a successful infection and its subsequent intracellular survival. However, the signaling pathways targeted by the bacilli to inhibit production of these cytokines are not fully understood. In this study, we demonstrate that the PPE18 protein of M. tuberculosis inhibits LPS-induced IL-12 and TNF-α production by blocking nuclear translocation of p50, p65 NF-κB, and c-rel transcription factors. We found that PPE18 upregulates the expression as well as tyrosine phosphorylation of suppressor of cytokine signaling 3 (SOCS3), and the phosphorylated SOCS3 physically interacts with IκBα–NF-κB/rel complex, inhibiting phosphorylation of IκBα at the serine 32/36 residues by IκB kinase-β, and thereby prevents nuclear translocation of the NF-κB/rel subunits in LPS-activated macrophages. Specific knockdown of SOCS3 by small interfering RNA enhanced IκBα phosphorylation, leading to increased nuclear levels of NF-κB/rel transcription factors vis-a-vis IL-12 p40 and TNF-α production in macrophages cotreated with PPE18 and LPS. The PPE18 protein did not affect the IκB kinase-β activity. Our study describes a novel mechanism by which phosphorylated SOCS3 inhibits NF-κB activation by masking the phosphorylation site of IκBα. Also, this study highlights the possible mechanisms by which the M. tuberculosis suppresses production of proinflammatory cytokines using PPE18.