Human CD34 fibrocytes, circulating monocyte lineage progenitor cells, have recently been implicated in thyroid-associated ophthalmopathy (TAO), the ocular manifestation of Graves' disease (GD). Fibrocytes express constitutive MHC class II (MHC-2) and, surprisingly, thyroglobulin (Tg) and functional thyrotropin (TSH) receptor (TSHR). Underlying expression of these thyroid proteins is the autoimmune regulator protein (AIRE). Fibrocytes respond robustly to TSH and thyroid-stimulating Igs by generating extremely high levels of inflammatory cytokines, such as IL-6. In TAO, they appear to infiltrate the orbit, where they transition to CD34 orbital fibroblasts (OF). There, they coexist with CD34 OF as a mixed fibroblast population (GD-OF). In contrast to fibrocytes, GD-OF express vanishingly low levels of MHC-2, Tg, TSHR, and AIRE. Further, the amplitude of IL-6 induction by TSH in GD-OF is substantially lower. The molecular basis for this divergence between fibrocytes and CD34 OF remains uncertain. In this article, we report that Slit2, an axon guidance glycoprotein, is constitutively expressed by the CD34 OF subset of GD-OF. Culture conditioned medium (CM) generated by incubating with GD-OF and CD34 OF substantially reduces levels of MHC-2, Tg, TSHR, and AIRE in fibrocytes. Expression can be restored by specifically depleting CM of Slit2. The effects of CD34 OF CM are mimicked by recombinant human Slit2. TSH induces Slit2 levels in GD-OF by enhancing both Slit2 gene transcription and mRNA stability. These findings suggest that Slit2 represents a TSH-inducible factor within the TAO orbit that can modulate the inflammatory phenotype of CD34 OF and therefore may determine the activity and severity of the disease.