Systemic lupus erythematosus (SLE) is an autoimmune disease characterized by dysregulated immune responses mediated by T and B cells. A tolerogenic peptide, designated hCDR1, ameliorated the serological and clinical manifestations of SLE in mouse models of lupus. We investigated the role of B-cell activating factor (BAFF) in the beneficial effects of hCDR1. BAFF production was reduced in hCDR1-treated mice in association with diminished production of dsDNA-specific autoantibodies and proteinuria levels. In addition, IFN-gamma and IL-10, which induce BAFF secretion, were down-regulated in hCDR1-treated mice. The reduced levels of BAFF correlated with a lower rate of maturation and differentiation of B cells, and with a decrease in integrin expression and anti-apoptotic gene expression by B cells. Moreover, BAFF signaling through the NF-kB pathways was inhibited in hCDR1-treated mice. Thus, down-regulation of BAFF plays a role in the mechanism of action by which hCDR1 ameliorates lupus manifestations.