Early growth response gene (Egr)-2 is important for the maintenance of T cell homeostasis and controls the development of autoimmune disease. However, the underlying mechanisms are unknown. We have now discovered that Egr-2, which is induced by TGF-β and IL-6, negatively regulates the expression of IL-17, but not IL-2 or IFN-γ, in effector T cells. In the absence of Egr-2, CD4 T cells produce high levels of Th17 cytokines, which renders mice susceptible to experimental autoimmune encephalomyelitis induction. T cells lacking Egr-2 show increased propensity for Th17, but not Th1 or Th2, differentiation. Control of IL-17 expression and Th17 differentiation by Egr-2 is due to inhibition of Batf, a transcription factor that regulates IL-17 expression and Th17 differentiation. Egr-2 interacts with Batf in CD4 T cells and suppresses its interaction with DNA sequences derived from the IL-17 promoter, whereas the activation of STAT3 and expression of retinoic acid-related orphan receptor γt are unchanged in Th17 cells in the absence of Egr-2. Thus, Egr-2 plays an important role to intrinsically control Th17 differentiation. We also found that CD4 T cells from multiple sclerosis patients have reduced expression of Egr-2 and increased expression of IL-17 following stimulation with anti-CD3 in vitro. Collectively, our results demonstrate that Egr-2 is an intrinsic regulator that controls Th17 differentiation by inhibiting Batf activation, which may be important for the control of multiple sclerosis development.