Chlamydia trachomatis (C.tr), an obligate intracellular pathogen, causes asymptomatic genital infections in women and is a leading cause of preventable blindness. We have developed in vivo mouse models of acute and chronic C. trachomatis genital infection to explore the significance of macrophage-directed response in mediating immune activation/suppression. Our findings reveal that during chronic and repeated C. trachomatis infections, Th1 response is abated while Treg response is enhanced. Additionally, an increase in exhaustion (PD1, CTLA4) and anergic (Klrg3, Tim3) T cell markers is observed during chronic infection. We have also observed that M2 macrophages with low CD40 expression promote Th2 and Treg differentiation leading to sustained C. trachomatis genital infection. Macrophages infected with C. trachomatis or treated with supernatant of infected epithelial cells drive them to an M2 phenotype. C. trachomatis infection prevents the increase in CD40 expression as observed in western blots and flow cytometric analysis. Insufficient IFNγ, as observed during chronic infection, leads to incomplete clearance of bacteria and poor immune activation. C. trachomatis decapacitates IFNγ responsiveness in macrophages via hampering IFNγRI and IFNγRII expression which can be correlated with poor expression of MHC-II, CD40, iNOS and NO release even following IFNγ supplementation. M2 macrophages during C. trachomatis infection express low CD40 rendering immunosuppressive, Th2 and Treg differentiation which could not be reverted even by IFNγ supplementation. The alternative macrophages also harbour high bacterial load and are poor responders to IFNγ, thus promoting immunosuppression. In summary, C. trachomatis modulates the innate immune cells, attenuating the anti-chlamydial functions of T cells in a manner that involves decreased CD40 expression on macrophages.