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An imbalance between pro-inflammatory and anti-inflammatory cytokines is a key factor in the lung injury of premature infants exposed to mechanical ventilation. Previous studies have shown that lung cells exposed to stretch produces reduced amounts of the anti-inflammatory cytokine IL-10. The objective of these studies was to analyze the signaling mechanisms responsible for the decreased IL-10 production in fetal type II cells exposed to mechanical stretch. Fetal mouse type II epithelial cells isolated at embryonic day 18 were exposed to 20% stretch to simulate lung injury. We show that IL-10 receptor gene expression increased with gestational age. Mechanical stretch decreased not only IL-10 receptor gene expression but also IL-10 secretion. In contrast, mechanical stretch increased release of IL-6. We then investigated IL-10 signaling pathway-associated proteins and found that in wild-type cells, mechanical stretch decreased activation of JAK1 and TYK2 and increased STAT3 and SOCS3 activation. However, opposite effects were found in cells isolated from IL-10 knockout mice. Reduction in IL-6 secretion by stretch was observed in cells isolated from IL-10 null mice. To support the idea that stretch-induced SOCS3 expression via IL-6 leads to reduced IL-10 expression, siRNA-mediated inhibition of SOCS3 restored IL-10 secretion in cells exposed to stretch and decreased IL-6 secretion. Taken together, these studies suggest that the inhibitory effect of mechanical stretch on IL-10 secretion is mediated via activation of IL-6-STAT3-SOCS3 signaling pathway. SOCS3 could be a therapeutic target to increase IL-10 production in lung cells exposed to mechanical injury.