CD52, a glycophosphatidylinositol (GPI)-anchored glycoprotein, is released in a soluble form following T cell activation and binds to the Siglec (sialic acid-binding Ig-like lectin)-10 receptor on T cells to suppress their function. We show that binding of CD52-Fc to Siglec-10 and T cell suppression requires the damage-associated molecular pattern (DAMP) protein, high-mobility group box 1 (HMGB1). CD52-Fc bound specifically to the proinflammatory Box B domain of HMGB1, and this in turn promoted binding of the CD52 N-linked glycan, in α-2,3 sialic acid linkage with galactose, to Siglec-10. Suppression of T cell function was blocked by anti-HMGB1 antibody or the antiinflammatory Box A domain of HMGB1. CD52-Fc induced tyrosine phosphorylation of Siglec-10 and was recovered from T cells complexed with HMGB1 and Siglec-10 in association with SHP1 phosphatase and the T cell receptor (TCR). Thus, soluble CD52 exerts a concerted immunosuppressive effect by first sequestering HMGB1 to nullify its proinflammatory Box B, followed by binding to the inhibitory Siglec-10 receptor, triggering recruitment of SHP1 to the intracellular immunoreceptor tyrosine-based inhibitory motif of Siglec-10 and its interaction with the TCR. This mechanism may contribute to immune-inflammatory homeostasis in pathophysiologic states and underscores the potential of soluble CD52 as a therapeutic agent.