Mucosal (nasal or oral) administration of anti-CD3 mAb is effective in ameliorating animal models of autoimmunity (experimental autoimmune encephalomyelitis, diabetes, and lupus) by inducing LAP(+) regulatory T cells. We tested this approach in an arthritis model using type II collagen. We found that nasal anti-CD3 was more effective than oral anti-CD3 in attenuating the development of arthritis. Nasal anti-CD3 induced a LAP(+) regulatory T cell that secreted high levels of IL-10 and suppressed collagen-specific T cell proliferation and anti-collagen Ab production. However, neither nasal nor oral anti-CD3 attenuated disease when given to animals with ongoing arthritis, and this was associated with a lack of induction of LAP(+) regulatory T cells. We found, however, that coadministration of a novel emulsome adjuvant, which enhances Th2 responses, resulted in the induction of LAP(+) regulatory T cells and suppression of ongoing arthritis by both nasal and oral anti-CD3. Suppression of arthritis by mucosal anti-CD3 was associated with less joint damage, a decrease of TNF-alpha and IFN-gamma mRNA expression in joints, and a reduction in anti-collagen Abs. These results demonstrate that mucosal anti-CD3 therapy may serve as a therapeutic approach in arthritis and that the biologic effect is enhanced by an emulsome-based adjuvant.