TNF-related apoptosis-inducing ligand (TRAIL) is a death ligand that can induce apoptosis in cells expressing its cognate death receptors (DRs). Previously, we demonstrated the therapeutic potential of recombinant human TRAIL in experimental rheumatoid arthritis (RA) models. However, the mechanisms of how DR-mediated apoptosis elicits these actions is not known. Here, we show that systemically administering a potent, long-acting PEGylated TRAIL (TRAILPEG) is profoundly anti-rheumatic against two complementary experimental RA mouse models, collagen-induced arthritis (CIA) and collagen antibody-induced arthritis (CAIA), via targeting IL-17 secreting Th17 cells and regulatory T cells (Treg). Systemic administration of TRAILPEG after disease onset ameliorated the severity of inflammatory arthritis including arthritis indices, paw thickness, cartilage damage and neutrophil infiltration in both CIA and CAIA models. Additionally, the levels of inflammatory molecules (p-p65, ICAM-1, Cox-2, MMP3, and iNOS), pro-inflammatory cytokines (TNF-α, IL-1β, IFN-γ, IL-6, IL-17) and accumulation of activated macrophages were significantly reduced after the TRAILPEG treatment. Importantly, TRAILPEG decreased the number of pro-inflammatory Th17 cells in inflamed arthritic joints through TRAIL-induced apoptosis while increasing anti-inflammatory Treg population in vivo. These results suggest that TRAILPEG ameliorates autoimmunity by targeting the Th 17-Tregs axis, making it a promising candidate drug for the treatment of RA.