The ocular microenvironment is an extreme example of regional immunity. Within its microenvironment, expression of delayed type hypersensitivity (DTH) is suppressed. This immunosuppression is mediated in part by the constitutive expression of alpha-MSH. Previously we have found that alpha-MSH suppresses the production of IFN-gamma by activated effector T cells. Recently we have found that alpha-MSH can mediate induction of TGF-beta-producing T cells that act as regulatory T cells. This has encouraged us to further examine the potential for alpha-MSH to suppress T cell-mediated inflammation (autoimmune disease) and to regulate lymphokine production by effector T cells. When alpha-MSH was injected i.v. into mice at the time of peak retinal inflammation, the severity of experimental autoimmune uveitis (EAU) was significantly suppressed. Effector T cells activated in vitro in the presence of alpha-MSH proliferated and produced IL-4 and enhanced levels of TGF-beta while their IFN-gamma and IL-10 production was suppressed. The alpha-MSH-treated T cells functioned as regulatory T cells by suppressing in vitro IFN-gamma production by other inflammatory T cells. This regulatory activity was the function of alpha-MSH-treated CD4+ CD25+ T cells. Therefore, alpha-MSH mediates immunosuppression by inducing a differential expression of lymphokine production and by inducing activation of regulatory functions in T cells. This implies that alpha-MSH may take part in regional mechanisms of immunosuppression and possibly peripheral tolerance. Thus, alpha-MSH can be used to suppress autoimmune disease and possibly reestablish tolerance to autoantigens.