IL-21 can induce both plasma cells and regulatory B cells. In this article, we demonstrate that untreated HIV patients display CD4(+) T cells with enhanced IL-21 expression and high in vivo frequencies of regulatory B cells overexpressing the serine protease granzyme B. Granzyme B-expressing regulatory B cells (GraB cells) cells from HIV patients exhibit increased expression of CD5, CD43, CD86, and CD147 but do not produce IL-10. The main functional characteristic of their regulatory activity is direct granzyme B-dependent degradation of the TCR-ζ-chain, resulting in significantly decreased proliferative T cell responses. Although Th cells from HIV patients secrete IL-21 in a Nef-dependent manner, they barely express CD40L. When culturing such IL-21(+)CD40L(-) Th cells with B cells, the former directly induce B cell differentiation into GraB cells. In contrast, the addition of soluble CD40L multimers to T cell/B cell cultures redirects B cell differentiation toward plasma cells, indicating that CD40L determines the direction of IL-21-dependent B cell differentiation. As proof of principle, we confirmed this mechanism in a patient lacking intact CD40 signaling due to a NEMO mutation. The majority of peripheral B cells from this patient were GraB cells and strongly suppressed T cell proliferation. In conclusion, GraB cells represent potent regulatory B cells in humans that are phenotypically and functionally distinct from B10 cells and occur in early HIV infection. GraB cells may contribute significantly to immune dysfunction in HIV patients, and may also explain ineffective Ab responses after vaccination. The use of soluble CD40L multimers may help to improve vaccination responses in HIV patients.