Classically, HLA-DR expressed on antigen presenting cells (APC) initiates lymphocyte activation via presentation of peptides to TCR bearing CD4+ T-Cells. Here we demonstrate that HLA-DR alpha 2 domain (sHLA-DRalpha2) also induces negative signals by engaging TIRC7 on lymphocytes. This interaction inhibits proliferation and induces apoptosis in CD4+ and CD8+ T-cells via activation of the intrinsic pathway. Proliferation inhibition is associated with SHP-1 recruitment by TIRC7, decreased phosphorylation of STAT4, TCR-zeta chain & ZAP70, and inhibition of IFN-gamma and FasL expression. HLA-DRalpha2 and TIRC7 co-localize at the APC-T cell interaction site. Triggering HLA-DR - TIRC7 pathway demonstrates that sHLA-DRalpha2 treatment inhibits proinflammatory-inflammatory cytokine expression in APC & T cells after lipopolysaccaride (LPS) stimulation in vitro and induces apoptosis in vivo. These results suggest a novel antiproliferative role for HLA-DR mediated via TIRC7, revise the notion of an exclusive stimulatory interaction of HLA-DR with CD4+ T cells and highlights a novel physiologically relevant regulatory pathway.