Interferon (IFN)-beta is a front-line therapy for the treatment of the relapsing-remitting form of multiple sclerosis. However, its immunosuppressive mechanism of function remains incompletely understood. While it has been proposed that IFN-beta suppresses the function of inflammatory myelin antigen-reactive T cells by promoting the release of immunomodulatory cytokines such as IL-27 from antigen-presenting cells (APCs), its direct effects on inflammatory CD4(+) Th1 cells are less clear. Here, we establish that IFN-beta inhibits mouse IFN-gamma(+) Th1 cell function in the absence of APCs. CD4(+) T cells express the type I interferon receptor, and IFN-beta can suppress Th1 cell proliferation under APC-free stimulation conditions. IFN-beta-treated myelin antigen-specific Th1 cells are impaired in their ability to induce severe experimental autoimmune encephalomyelitis (EAE) upon transfer to lymphocyte-deficient Rag1(-/-) mice. Polarized Th1 cells downregulate IFN-gamma and IL-2, and upregulate the negative regulatory receptor Tim-3, when treated with IFN-beta in the absence of APCs. Further, IFN-beta treatment of Th1 cells upregulates phosphorylation of Stat1, and downregulates phosphorylation of Stat4. Our data indicate that IFN-gamma-producing Th1 cells are directly responsive to IFN-beta and point to a novel mechanism of IFN-beta-mediated T cell suppression that is independent of APC-derived signals.