Maintaining tolerance of T cells to self-antigens is essential to avoid autoimmune disease. How self-reactive T cells are kept functionally inactive is, however, unknown. In this study, we show that early growth response gene 2 (Egr-2), a zinc-finger transcription factor, is expressed in CD44^high T cells and controls their proliferation and activation. In the absence of Egr-2, CD44^high, but not CD44^low T cells, are hyperreactive and hyperproliferative in vivo. The accumulation of activated CD4⁺CD44^high T cells leads to the development of a late onset lupuslike autoimmune disease characterized by the accumulation of interferon (IFN)-γ and interleukin (IL)-17–producing CD4⁺ T cells, loss of tolerance to nuclear antigens, massive infiltration of T cells into multiple organs and glomerulonephritis. We found that the expression of cyclin-dependent kinase inhibitor p21cip1 was impaired in Egr-2–deficient T cells, whereas the expression of IFN-γ and IL-17 in response to T cell receptor ligation was significantly increased, suggesting that Egr-2 activates the expression of genes involved in the negative regulation of T cell proliferation and inflammation. These results demonstrate that Egr-2 is an intrinsic regulator of effector T cells and controls the expansion of self-reactive T cells and development of autoimmune disease.