Diseases caused by immune inflammation, such as rheumatoid arthritis, multiple sclerosis, and Crohn’s disease, are intractable diseases to which novel therapeutics are highly demanded. Prostaglandin (PG) E₂ is the most ubiquitously produced PG with various actions. PGE₂ has been traditionally regarded as an immunosuppressant based on its inhibition of T cell activation in vitro. However, in vivo relevance of the immunosuppressant action of PGE₂ has remained obscure. Recently, several groups including ourselves have made unexpected findings that PGE₂ facilitates expansion of the Th17 subset of T helper cells of both human and mouse through elevation of cAMP via PGE receptors EP2 and EP4. We have further found that PGE₂ can induce and not suppress Th1 differentiation under certain conditions, again, through EP2 and EP4. Given the putative roles of these Th subsets in immune diseases such as the above, these findings suggest that, on the contrary to the traditional view, PGE₂ functions as a mediator of immune inflammation. Consistently, administration of an EP4 antagonist could suppress disease progression and development of antigen-specific Th17 cells in mice subjected to experimental allergic encephalomyelitis and contact hypersensitivity. In this perspective, we review these findings and discuss the prospect of EP4 antagonists as immunomodulatory drugs.