Prostaglandins, particularly prostaglandin E2 (PGE2), play an important role during inflammation. This is exemplified by the clinical use of cyclooxygenase 2 inhibitors, which interfere with PGE2 synthesis, as effective antiinflammatory drugs. Here, we show that PGE2 directly promotes differentiation and proinflammatory functions of human and murine IL-17–producing T helper (Th17) cells. In human purified naive T cells, PGE2 acts via prostaglandin receptor EP2- and EP4-mediated signaling and cyclic AMP pathways to up-regulate IL-23 and IL-1 receptor expression. Furthermore, PGE2 synergizes with IL-1β and IL-23 to drive retinoic acid receptor–related orphan receptor (ROR)-γt, IL-17, IL-17F, CCL20, and CCR6 expression, which is consistent with the reported Th17 phenotype. While enhancing Th17 cytokine expression mainly through EP2, PGE2 differentially regulates interferon (IFN)-γ production and inhibits production of the antiinflammatory cytokine IL-10 in Th17 cells predominantly through EP4. Furthermore, PGE2 is required for IL-17 production in the presence of antigen-presenting cells. Hence, the combination of inflammatory cytokines and noncytokine immunomodulators, such as PGE2, during differentiation and activation determines the ultimate phenotype of Th17 cells. These findings, together with the altered IL-12/IL-23 balance induced by PGE2 in dendritic cells, further highlight the crucial role of the inflammatory microenvironment in Th17 cell development and regulation.