This study describes a novel method of inhibiting T-cell function by the use of peptides rationally designed from the T-cell antigen receptor (TCR) alpha-chain transmembrane sequence involved with TCR receptor assembly. The most effective peptide (core peptide, CP) modulating in vitro and in vivo T-cell function contained nine amino acids two of which, lysine and arginine, were hydrophilic and separated by four hydrophobic amino acids. CP without chemical modification or conjugation was able to enter non-T and T cells. Conjugation of CP at the carboxyl terminus with palmitic acid resulted in a greater inhibition of T-cell interleukin-2 (IL-2) production in vitro than peptide alone. When examined for effects in vivo, CP reduced clinical signs of inflammation in three T cell-mediated disease models including adjuvant-induced arthritis, experimental allergic neuritis, and cyclophosphamide-induced diabetes in NOD/Lt(F) mice. This peptide or its analogues has potential as a therapeutic agent in human inflammatory and autoimmune disorders.