In this study, we investigated the efficacy of new bifunctional peptide inhibitors (BPIs) in suppressing experimental autoimmune encephalomyelitis (EAE) in an animal model. BPI [e.g. proteolipid protein–cyclo(1,8)-CPRGGSVC-NH2 (PLP-cIBR)] is a conjugate between the PLP139–151 peptide derived from proteolipid protein (PLP) and the cIBR7 peptide derived from domain-1 (D1) of intercellular adhesion molecule-1 (ICAM-1). PLP–cIBR is designed to bind to major histocompatibility complex (MHC)-II and leucocyte function-associated antigen-1 (LFA-1) simultaneously to inhibit the formation of the immunological synapse and alter the differentiation and activation of a subpopulation of T cells, thus inducing immunotolerance. The results show that PLP–cIBR is highly potent in ameliorating EAE, even at low concentrations and less frequent injections. Mice treated with PLP–cIBR had a higher secretion of cytokines related to regulatory and/or suppressor cells compared to phosphate-buffered saline (PBS)-treated mice. In contrast, T helper type 1 (Th1) cytokines were higher in mice treated with PBS compared to PLP–cIBR, suggesting that it suppressed Th1 proliferation. Also, we observed significantly less demyelination in PLP-cIBR-treated mice compared to the control, further indicating that PLP–cIBR promoted protection against demyelination.