Introduction Our previous studies showed that arthritic Lewis (LEW) rats produced the highest levels of tumour necrosis factor (TNF)α in the recovery phase of adjuvant arthritis (AA), suggesting a correlation between high TNFα levels and reduced severity of arthritis. To further explore this correlation, we compared the TNFα secretion profile of the AA-resistant Wistar Kyoto (WKY) rats with that of LEW rats, determined the effect of exogenous TNFα on the course of AA in LEW rats, and examined various mechanisms involved in TNFα-induced disease modulation. Methods A cohort each of LEW and WKY rats was immunised subcutaneously with heat-killed Mycobacterium tuberculosis H37Ra (Mtb). At different time points thereafter, subgroups of rats were killed and their draining lymph node cells were tested for cytokine production. Another group of LEW rats was injected with TNFα intraperitoneally daily for a total of 10 injections, 3 before and 6 after Mtb challenge, and then observed for signs of AA. In parallel, TNFα-treated rats were examined for changes in other cytokines, in CD4+CD25+ T cell frequency, and in indoleamine 2,3-dioxygenase (IDO) mRNA expression levels. Results LEW rats displayed a TNFα secretion profile that was opposite to that of the WKY rats. Furthermore, TNFα treatment significantly downmodulated the severity of AA in LEW rats, and decreased the interferon (IFN)-γ secretion in response to the pathogenic determinant of the disease-related antigen. No significant alterations were observed in other parameters tested. Conclusion The role of endogenous TNFα in the induction and propagation of arthritis is well established. However, exogenous TNFα can downmodulate the course of AA, displaying an immunoregulatory functional attribute of this cytokine.