We previously showed that transgenically expressed chimeric Ag-MHC-zeta receptors can Ag-specifically redirect T cells against other T cells. When the receptor's extracellular Ag-MHC domain engages cognate TCR on an Ag-specific T cell, its cytoplasmic zeta-chain stimulates the chimeric receptor-modified T cell (RMTC). This induces effector functions such as cytolysis and cytokine release. RMTC expressing a myelin basic protein (MBP) 89-101-IAs-zeta receptor can be used therapeutically, Ag-specifically treating murine experimental allergic encephalomyelitis (EAE) mediated by MBP89-101-specific T cells. In initial studies, isolated CD8+ RMTC were therapeutically effective whereas CD4+ RMTC were not. We re-examine here the therapeutic potential of CD4+ RMTC. We demonstrate that Th2-differentiated, though not Th1-differentiated, CD4+ MBP89-101-IAs-zeta RMTC prevent actively induced or adoptively transferred EAE, and treat EAE even after antigenic diversification of the pathologic T cell response. The Th2 RMTC both Th2-deviate autoreactive T cells and suppress autoantigen-specific T cell proliferation. IL-10 is critical for the suppressive effects. Anti-IL-10R blocks RMTC-mediated modulation of EAE and suppression of autoantigen proliferation, as well as the induction of IL-10 production by autoreactive T cells. In contrast to IL-10, IL-4 is required for IL-4 production by, and hence Th2 deviation of autoreactive T cells, but not the therapeutic activity of the RMTC. These results therefore demonstrate a novel immunotherapeutic approach for the Ag-specific treatment of autoimmune disease with RMTC. They further identify an essential role for IL-10, rather than Th2-deviation itself, in the therapeutic effectiveness of these redirected Th2 T cells.