Dendritic cells (DCs) are potent antigen-presenting cells that link the innate and adaptive immune responses; as such they play pivotal roles in initiation and progression of rheumatoid arthritis (RA). Here, we report that the tonicity-responsive enhancer-binding protein (TonEBP or NFAT5), a Rel family protein involved in the pathogenesis of autoimmune disease and inflammation, is required for maturation and function of DCs. Myeloid cell-specific TonEBP deletion reduces disease severity in a murine model of collagen-induced arthritis; it also inhibits maturation of DCs and differentiation of pathogenic Th1 and Th17 cells in vivo. Upon stimulation by TLR4, TonEBP promotes surface expression of major histocompatibility complex class II and co-stimulatory molecules via p38 mitogen-activated protein kinase. This is followed by DC-mediated differentiation of pro-inflammatory Th1 and Th17 cells. Taken together, these findings provide mechanistic basis for the pathogenic role of TonEBP in RA and possibly other autoimmune diseases.