Cells of the innate immune system secrete cytokines early in immune responses that guide maturing T helper (Th) cells along appropriate lineages. This study investigates the role of cytokine networks, bridging the innate and acquired immune systems, in the pathogenesis of an organ specific autoimmune disease. Experimental allergic encephalomyelitis (EAE), a demyelinating disease of the central nervous system, is widely used as an animal model for multiple sclerosis. We demonstrate that interleukin (IL)-12 is essential for the generation of the autoreactive Th1 cells that induce EAE, both in the presence and absence of interferon gamma. The disease-promoting effects of IL-12 are antagonized by IL-10 produced by an antigen nonspecific CD4+ T cell which, in turn, is regulated by the endogenous production of IL-12. This unique immunoregulatory circuit appears to play a critical role in controlling Th cell differentiation and provides a mechanism by which microbial triggers of the innate immune system can modulate autoimmune disease.