The effect of a novel thiazole derivative, SM-8849, on experimental arthritis in mice was studied and compared to that of prednisolone. SM-8849 and prednisolone reduced the incidence and severity of type II collagen-induced arthritis in mice, as assayed by clinical observation and histopathological studies. Although both agents inhibited type II collagen-induced delayed type hypersensitivity (DTH) in arthritic mice, SM-8849 did not affect the production of humoral antibodies to type II collagen. To examine the inhibitory mechanism of SM-8849, the effects on T cell-dependent allergic inflammation were studied. SM-8849 clearly inhibited T cell-dependent reactions including staphylococcal enterotoxin B (SEB)-induced arthritis, SEB-induced CD25 expression on T cells and sheep red blood cell (SRBC)-induced DTH reaction. SM-8849, however, had no effect on the production of humoral antibody forming cells in the spleen of mice immunized with SRBC. These results indicate that inhibition of type II collagen-induced arthritis by SM-8849 is mainly due to the inactivation of T cells that are related to DTH reaction.