Autoimmune T cells directed against central nervous system associated myelin antigens were previously shown to reduce the spread of damage after axonal injury. Using morphological, morphometric, and immunocytochemical techniques, we show that, in rats with contused spinal cords, recovery after systemic treatment with such T cells is manifested by sparing of axons, including the myelin sheath, and by prevention of cyst formation. In treated cords, analysis of cellular elements revealed colocalization of T cells and B7‐2, a costimulatory molecule known to be associated with activation of anti‐inflammatory T cells (Th2 phenotype); some of the T cells express B7‐2. It is interesting that this colocalization was restricted mainly to structures that, in the absence of the T cell treatment, developed into cystlike cavities. We conclude that interaction between myelin‐specific autoimmune T cells and cellular elements in the damaged nerves, possibly mediated via microglia and in a B7–2–dependent manner, initiates a cascade that leads to secretion of a repertoire of factors that protect the neural tissue.