Transforming growth factor beta (TGF-beta) plays a role both in the induction of Treg and in the differentiation of the IL-17-secreting T cells (Th17) which drive inflammation in experimental autoimmune encephalomyelitis (EAE). We investigated the role that thrombospondin-1 (TSP-1) dependent activation of TGF-beta played in the generation of an encephalitic Th17 response in EAE. Upon immunization with myelin oligodendrocyte glycoprotein peptide (MOG(35-55)), TSP-1 deficient (TSP-1(null)) mice and MOG(35-55) TCR transgenic mice that lack of TSP-1 (2D2 x TSP-1(null)) exhibited an attenuated form of EAE, and secreted lower levels of IL-17. Adoptive transfer of in vitro-activated 2D2 x TSP-1(null) T cells induced a milder form of EAE, independent of TSP-1 expression in the recipient mice. Furthermore, in vitro studies demonstrated that anti-CD3/anti-CD28 pre-activated CD4+ T cells transiently upregulated latent TGF-beta in a TSP-1 dependent way, and such activation of latent TGF-beta was required for the differentiation of Th17 cells. These results demonstrate that TSP-1 participates in the differentiation of Th17 cells through its ability to activate latent TGF-beta, and enhances the inflammatory response in EAE.