FK506 and cyclosporin A inhibited the development of antigen-induced arthritis in the rat and rabbit. FK506 was five times more potent than cyclosporin A in the rat and approximately 20 times more potent in the rabbit. FK506 was effective in both species if administered either from the day of intra-articular administration of antigen or when the arthritis was established. In the rabbit, arthritis returned when administration of FK506 was stopped. FK506 (10 mg/kg/day) caused renal damage which was not observed at a dose of 2.5 mg/kg/day. Both of these doses were equally effective at inhibiting the arthritis. The conclusion from these studies is that FK506 is a more effective anti-arthritic agent than cyclosporin A and that a pronounced therapeutic effect can be achieved at non-toxic doses of the drug.