The effects of the new immunomodulating isoxazol derivative leflunomide, in comparison with cyclosporin A, on established antigen-induced arthritis in rats as well as serum antibody levels were determined. When treatment with leflunomide, at concentrations from 2.5 to 10 mg/kg/d, was started on day 3 of arthritis, the acute and chronic phases of arthritis were effectively inhibited. This was demonstrated by decreased joint swelling and reduced histopathological arthritis score at the end of experiment (day 26). Furthermore, the treatment resulted in a significantly reduced level of serum antibodies to the matrix components collagen type I, type II and proteoglycans. Neither leflunomide nor cyclosporin A, at doses of 1 mg/kg/d, had an effect on the severity of arthritis and antibody levels. However, when both drugs were used together, at these non-effective doses, the histopathological score of chronic arthritis was significantly reduced. The results of our experiments demonstrate that leflunomide has a strong suppressive effect on both acute and chronic phases of antigen-induced arthritis and formation of autoantibodies in rats. Furthermore, orally administered doses of leflunomide were as effective as doses of cyclosporin A given intraperitoneally. The combination of sub-effective doses of leflunomide and cyclosporin A resulted in significant inhibition of chronic arthritis.