Experimental allergic encephalomyelitis (EAE) is an autoimmune disease characterized by central nervous system inflammation and demyelination. Retinoids regulate cell differentiation and growth by binding to and activating retinoic acid receptors, which seem to be nuclear transcription factors. The effect of retinoids on chronic relapsing EAE produced by the transfer of myelin basic protein (MBP)-specific lymph node cells (LNC) was studied. All-trans-retinoic acid (tRA) inhibited the proliferation of MBP-specific LNC in vitro. However, the capacity of these cells to transfer EAE was markedly reduced by concentrations of tRA that only mildly inhibited T cell proliferation. The presence of tRA during in vitro MBP-specific LNC activation resulted in a considerable increase in IL-4 mRNA, whereas mRNA for IL-2, TNF-alpha, and IFN-gamma was decreased. Increased IL-4 also was detected in culture supernatants. However, the presence of a neutralizing Ab to IL-4 (11B11) during MBP-specific LNC activation in vitro did not reverse the inhibition of encephalitogenicity caused by tRA. The administration of retinoids in vivo resulted in an improved clinical course, even when given after disease onset. These findings suggest that T cell activation in the presence of tRA results in the development of T cells of the Th2 phenotype, which, in turn, might be responsible for the decrease in the encephalitogenicity of MBP-specific T cells. The modulation by retinoids of an immune response dominated by Th1-like T cells to one in which the protective cytokines of Th2-like cells predominate may have potential relevance for human demyelinating diseases such as multiple sclerosis.