Interleukin 17 (IL-17) has been linked to autoimmune diseases, although its regulation and function have remained unclear. Here we have evaluated in vitro and in vivo the requirements for the differentiation of naive CD4 T cells into effector T helper cells that produce IL-17. This process required the costimulatory molecules CD28 and ICOS but was independent of the cytokines and transcription factors required for T helper type 1 or type 2 differentiation. Furthermore, both IL-4 and interferon-γ negatively regulated T helper cell production of IL-17 in the effector phase. In vivo, antibody to IL-17 inhibited chemokine expression in the brain during experimental autoimmune encephalomyelitis, whereas overexpression of IL-17 in lung epithelium caused chemokine production and leukocyte infiltration. Thus, IL-17 expression characterizes a unique T helper lineage that regulates tissue inflammation.