Thyroid-stimulating antibodies (TSAbs) are responsible for hyperthyroid Graves' disease (GD). Although two peptides that bind to GD immunoglobulin G (IgG), and some monoclonal antibodies to the TSH receptor (TSH-R), have been reported to inhibit stimulation of cAMP production by patient serum TSAb, our work is the first to use phage-display technology to produce a mouse single-chain Fv antibody fragment (scFv) that binds to GD IgG and acts as a powerful TSAb (and TSH) antagonist. The specificity characteristics and relative affinity (2.8 mol/L) of T17 were identified by competitive inhibition ELISA and thiocyanate elution. The purified T17 scFv was then tested for its effect on stimulation of cAMP production by Graves' patients' sera in TSH receptor-transfected Chinese hamster ovary (CHO) cells. T17 was an effective antagonist of TSAb activity in 13 of 16 patients with GD. In addition, (125)I-TSH binding to TSH-R was also inhibited by T17 (57% inhibition at 1 mg/mL). This new scFv suggests in vitro applications such as purification of TSAb or diagnosis of GD. In addition, it may have in vivo usefulness such as treatment of TSH-R mediated ophthalmic symptoms of Graves' disease.