CD74, the cell-surface form of the MHC class II invariant chain, is a key inflammatory factor that is involved in various immune-mediated diseases as part of the macrophage migration inhibitory factor (MIF) binding complex. However, little is known about the natural regulators of CD74 in this context. In order to study the role of the HLA-DR molecule in regulating CD74, we used the HLA-DRα1 domain, which was shown to bind to and downregulate CD74 on CD11b(+) monocytes. We found that DRα1 directly inhibited binding of MIF to CD74 and blocked its downstream inflammatory effects in the spinal cord of mice with experimental autoimmune encephalomyelitis (EAE). Potency of the DRα1 domain could be destroyed by trypsin digestion but enhanced by addition of a peptide extension (myelin oligodendrocyte glycoprotein [MOG]-35-55 peptide) that provided secondary structure not present in DRα1. These data suggest a conformationally sensitive determinant on DRα1-MOG that is responsible for optimal binding to CD74 and antagonism of MIF effects, resulting in reduced axonal damage and reversal of ongoing clinical and histological signs of EAE. These results demonstrate natural antagonist activity of DRα1 for MIF that was strongly potentiated by the MOG peptide extension, resulting in a novel therapeutic, DRα1-MOG-35-55, that within the limitations of the EAE model may have the potential to treat autoimmune diseases such as multiple sclerosis.