IL-17-producing $CD4^+$ T cells (Th17) play important functions in autoimmune diseases and allograft rejection of solid organs. We examined the effects of IL 17 and its mechanism of action on arthritis in a murine collagen-induced arthritis (CIA) model using bone marrow transplantation (BMT) system. DBA/1J mice were administered a lethal radiation dose and then rescued with bone marrow derived from either wild-type (WT) or IL-$17^{-/-}$ mice on C57BL/6 background mice. CIA was induced after the bone marrow transplant, and disease disease progression was characterized. DBA/1J mice with CIA that received IL-$17^{-/-}$ donor bone marrow showed potently inhibited development and severity of clinical arthritis as compared with CIA mice that received WT bone marrow. Reduced secretion of the pro-inflammatory cytokines tumor necrosis factor-${alpha}$, IL-$1{eta}$, and IL-6, and collagen-specific T cell responses were observed in mice that received IL-$17^{-/-}$ bone marrow. IL-17 blockade also inhibited effector T cell proliferation by reciprocally regulating the Treg/Th17 ratio. IL-17 blockade prevented joint destruction in mice with CIA. These findings suggest that CIA with BMT is a viable method of immunological manipulation and that IL-17 deficiency suppresses severe joint destruction and inflammation in CIA mice. There may be clinical benefits in blocking IL-17 and BMT in the treatment of rheumatoid arthritis.