Earlier studies have reported the efficacy of type II collagen (C II) in treating rheumatoid arthritis (RA). However, a few studies have investigated the ability of the antigenic collagen to induce oral tolerance, which is defined as active nonresponse to an orally administered antigen. We hypothesized that water-soluble undenatured C II had a similar effect as C II in RA. The present study was designed to examine the oral administration of a novel, water-soluble, undenatured C II (commercially known as NEXT-II) on collagen-induced arthritis (CIA) in mice. In addition, the underlying mechanism of NEXT-II was also identified. After a booster dose (collagen-Freund's complete adjuvant), mice were assigned to control CIA group, or NEXT-II treatment group, to which saline and NEXT-II were administered, respectively. The arthritis index in the NEXT-II group was significantly lower compared with the CIA group. Serum IL-6 levels in the NEXT-II group were significantly lower compared with the CIA group, while serum IL-2 level was higher. Furthermore, oral administration of NEXT-II enhanced the proportion of CD4+CD25+T (Treg) cells, and gene expressions of stimulated dendritic cells induced markers for regulatory T cells such as forkhead box p3 (Foxp3), transforming growth factor (TGF)-β1, and CD25. These results demonstrated that orally administered water-soluble undenatured C II (NEXT-II) is highly efficacious in the suppression of CIA by inducing CD4+CD25+ Treg cells.