Disease progression in experimental autoimmune encephalomyelitis (EAE) is regulated by programmed death receptor 1 (PD-1) and its ligands, B7-H1 (programmed death ligand 1 (PD-L1)) and B7-DC (PD-L2). B7-H1 and B7-DC have negative regulatory effects upon binding PD-1 on activated T cells and B7-H1 deficiency increases severity of both diabetes and EAE. However, the role of PD-L expression on different APC in the CNS in regulating local T-cell function during relapsing EAE has not been examined. Our data show that the majority of CNS CD4+ T cells isolated during acute EAE are PD-1+, and T cells specific for relapse-associated epitopes express PD-1 upon antigen stimulation in the CNS. B7-H1 and B7-DC are differentially expressed on discrete APC populations in the inflamed CNS. B7-H1 and PD-1 have mainly inhibitory functions on CNS T cells. B7-H1 negatively regulates the stimulation of activated PD-1+ TH cells, in co-cultures with microglia and different CNS-infiltrating APC presenting endogenously processed peptides. The preponderance of IFN-γ+versus IL-17+ T cells in the CNS of B7-H1−/− mice suggests that B7-H1 more selectively suppresses TH-1 than TH-17 responses in vivo. In contrast, blockade of B7-DC has less pronounced regulatory effects. Overall, the results demonstrate that B7-H1 expressed by CNS myeloid APC negatively regulates T-cell activation during acute relapsing EAE.