TCR peptides, namely V beta 8.2-39-59 or the minimal idiotope, V beta 8-44-54, can treat experimental autoimmune encephalomyelitis (EAE) in Lewis rats, presumably by activating naturally induced TCR peptide-specific T cells that arise in response to the focused appearance of V beta 8.2+ encephalitogenic T cells. The purpose of the present study was to evaluate the mechanisms by which TCR peptides inhibit EAE. We found that treatment of EAE with the V beta 8.2-39-59 peptide did not induce any evidence of DNA fragmentation (apoptosis) in spinal cord cells isolated from clinically well rats, implicating a regulatory rather than a deletional mechanism. TCR peptide-specific T cell lines failed to inhibit EAE induced by already activated BP-specific T cells when the two T cell specificities were co-injected. However, coculturing the encephalitogenic T cells in the presence of the regulatory T cells during the activation step before transfer almost completely inhibited the induction of EAE. Inhibition could be induced by direct contact between the two cell types or by soluble factors produced in a transwell system, but was greatly enhanced when soluble V beta 8.2-39-59 peptide was used to optimally activate the regulatory T cells. The inhibition was regulatory cell dose dependent, and was reflected in vitro by reduced proliferation response and mRNA production for IL-3, and to a lesser extent, IFN-gamma and IL-2. These results indicate that regulation induced by TCR peptides involves cell-cell interactions that lead to the production and release of soluble factors that locally inhibit the activation of encephalitogenic T cells expressing MHC-bound idiotopes of the target V beta-chain, and possibly "bystander" specificities expressing different V beta-chains.