The treatment of chronic inflammatory diseases is complicated by their unpredictable, relapsing clinical course. Here, we describe a new strategy in which an inflammation-regulated therapeutic transgene is introduced into the joints to prevent recurrence of arthritis. To this end, we designed a recombinant adenoviral vector containing a two-component, inflammation-inducible promoter controlling the expression of human IL-10 (hIL-10) cDNA. When tested in vitro, this system had a low-level basal activity and was activated four to five orders of magnitude by various inflammatory stimuli, including TNF-alpha, IL-1 beta, IL-6, and LPS. When introduced in joints of rats with recurrent streptococcal cell wall-induced arthritis, the IL-10 transgene was induced in parallel with disease recurrence and effectively prevented the influx of inflammatory cells and the associated swelling of the joints. Levels of inflammation-inducible hIL-10 protein within the joints correlated closely with the severity of recurrence. An endogenously regulated therapeutic transgene can thus establish negative feedback and restore homeostasis in vivo while minimizing host exposure to the recombinant drug.