Infection remains a leading cause of morbidity and mortality in patients with SLE. To investigate this, previously we assessed the host defense status of autoimmune MRL/lpr mice and found that elaboration of active TGFbeta suppressed neutrophil function and decreased survival in response to Staphylococcus aureus infection. The purpose of the present work was to elucidate the molecular form and the cellular source of the active TGFbeta involved. Here, we report for the first time that TGFbeta1 is found in the active form inside B cells and plasma cells and that it circulates in the plasma complexed with IgG in two murine models of systemic autoimmunity and in some patients with SLE. IgG-bound active TGFbeta1 is many times more potent than uncomplexed active TGFbeta1 for suppression of neutrophil function in vitro and host defense against S. aureus infection in vivo. These data indicate that TGFbeta1 is in the active form inside B cells and plasma cells, that the formation of a complex of IgG and active TGFbeta1 is greatly accelerated in autoimmunity, and that this complex is extremely potent for suppression of PMN function and host defense against bacterial infection.