Systemic lupus erythematosus (SLE) is an autoimmune disease characterized by autoantibodies and systemic clinical manifestations. In this study we investigated the beneficial effects on murine lupus accomplished by a peptide based on the sequence of the complementarity-determining region 1 of an anti-DNA autoantibody (hCDR1) when given alone or in combination with cyclophosphamide (CYC), and determined the mechanisms underlying those effects. SLE-afflicted (NZB x NZW) F(1) mice were treated for 12 weeks with injections of hCDR1, CYC or a combination of both drugs. We found that hCDR1 and CYC ameliorated serological and renal manifestations of the diseased mice, down-regulated interferon-gamma and interleukin-10, and up-regulated transforming growth factor-beta. These effects were associated with an increment of naive CD4(+) cells at the expense of the number of CD4(+) cells with the memory/activated phenotype. Further, the number of CD8(+) cells in the diseased mice was increased by the two drugs, resulting in a significant decrease in the CD4 : CD8 ratio. However, whereas the frequency and activity of CD4(+) CD25(+) CD45RB(low) regulatory T cells and the expression of cytotoxic T-lymphocyte antigen 4 (CTLA-4) in CD4(+) cells were up-regulated by hCDR1 treatment, they were minimally affected following treatment with CYC. CTLA-4 played an important role in the activity of the hCDR1-induced CD4(+) CD25(+) cells as manifested by down-regulation of CD28 expression, decrease of activation-induced apoptosis, and modulation of the cytokine profile in CD4(+) CD25(-) cells derived from SLE-afflicted mice. Thus, although the two drugs have similar ameliorative effects, hCDR1 but not CYC elicits regulatory pathways that are of importance for tolerance induction in SLE.