This study was to investigate the effect of leflunomide on the immunosuppressive CD4+CD25+ regulatory T cells (CD4+CD25+ Tregs) in collagen-induced arthritis (CIA) rats. CIA was induced by collagen type II in Wistar rats. Immunofluorescence flow cytometry and RT-PCR were used to determine the proportion of CD4+CD25+ Tregs and the expression of Foxp3 mRNA, respectively. Proliferation of T lymphocytes was assayed with MTT reagent, and the level of transforming growth factor beta1 (TGF-beta1) in the supernatant of concanavalin A (Con A)-induced T lymphocytes was determined by ELISA kit. Our investigations demonstrated that inhibition of arthritis by leflunomide was related to changes in CD4+CD25+ Tregs. In addition, A771726, which is the active metabolite of leflunomide, promoted the differentiation of spleen lymphocytes into CD4+CD25+ Tregs, increased antiinflammatory cytokine TGF-beta1 secretion, and adjusted the activity of Con A-induced lymphocytes in vitro.