CD44 is expressed by a variety of cells, including glial and T cells. Furthermore, in the demyelinating lesions of multiple sclerosis, CD44 expression is chronically elevated. In this study, we demonstrate that targeted deletion of CD44 attenuated myelin oligodendrocyte glycoprotein peptide-induced experimental autoimmune encephalitomyelitis (EAE) through novel regulatory mechanisms affecting Th differentiation. Specifically, by developing chimeras and using adoptive transfer experiments, we noted that CD44 deficiency on CD4(+) T cells, but not other cells, conferred protection against EAE induction. CD44 expression played a crucial role in Th differentiation, inasmuch as deletion of CD44 inhibited Th1/Th17 differentiation while simultaneously enhancing Th2/regulatory T cell differentiation. In contrast, expression of CD44 promoted Th1/Th17 differentiation. When osteopontin and hyaluronic acid, the two major ligands of CD44, were tested for their role in Th differentiation, osteopontin, but not hyaluronic acid, promoted Th1/Th17 differentiation. Furthermore, activation of CD44(+) encephalitogenic T cells with myelin oligodendrocyte glycoprotein peptide led to demethylation at the ifnγ/il17a promoter region while displaying hypermethylation at the il4/foxp3 gene promoter. Interestingly, similar activation of CD44-deficient encephalitogenic T cells led to increased hypermethylation of ifnγ/il17a gene and marked demethylation of il4/foxp3 gene promoter. Together, these data suggested that signaling through CD44, in encephalitogenic T cells, plays a crucial role in the differentiation of Th cells through epigenetic regulation, specifically DNA methylation of Th1/Th17 and Th2 cytokine genes. The current study also suggests that molecular targeting of CD44 receptor to promote a switch from Th1/Th17 to Th2/regulatory T cell differentiation may provide a novel treatment modality against EAE.