Allergic contact dermatitis and contact hypersensitivity (CHS) are characterized by allergen-specific activation of CD8+ and CD4+ T cells and the production of cytokines resulting in an inflammatory response and tissue damage. We show here that the immunosuppressive compound leflunomide (N-[4-trifluoro-methylphenyl]-5-methylisoxazol-4 carboxamide, HWA 486) (LF) inhibited the contact allergic response induced in mice by epicutaneous application of the haptens dinitrofluorobenzene (DNFB) and oxazolone. The extent of ear swelling remained significantly reduced following repeated challenge with DNFB for up to 18 weeks. LF and DNFB had to be applied simultaneously for inhibition to occur. The loss of CHS responses was shown to be antigen-specific. Adoptive transfer of leukocytes from LF-treated mice into naïve mice resulted in a loss of CHS responsiveness. Transfer of both CD4+ and CD8+ cells was required for maximal loss of CHS responses, with CD8+ cells playing a major role. Significantly enhanced levels of IL-10 mRNA were detected in CD8+ T cells, but not in CD4+ T cells, following LF treatment of mice. LF also suppressed CHS responses in mice previously sensitized and challenged with hapten, when administered together with the hapten. Our data suggest that LF induces a long-lived tolerance in mice by inducing CD8+ and CD4+ regulatory T cells.