Abstract Rheumatoid arthritis is a joint-specific autoimmune inflammatory disease of unknown etiology. The K/BxN mouse is a model of rheumatoid arthritis that is thought to be mainly due to autoantibody-mediated inflammatory responses. We showed previously that homeostatic proliferation of autoreactive CD4+ T cells is required for disease initiation in the K/BxN mice. In this study, we show that the homeostatically proliferating CD4+CD25− T cells produce IL-21. We generated IL-21R-deficient (IL-21R−/−) K/BxN mice and found that these mice were completely refractory to the development of spontaneous arthritis. They contained fewer CD4+ T cells with a reduced proportion of homeostatically proliferating cells, fewer follicular Th cells, and, surprisingly, more Th17 cells than their control counterparts. They also failed to develop IgG1+ memory B cells and autoantigen-specific IgG1 Ab-secreting cells. IL-21 induced expression of receptor activator of NF-κB ligand (RANKL) a regulator of osteoclastogenesis, and few RANKL-expressing infiltrates were found in the synovia of IL-21R−/− K/BxN mice. Thus, our results demonstrate that IL-21 forms a positive feedback autocrine loop involving homeostatically activated CD4+ cells and that it plays an essential role in the development of autoimmune arthritis by mechanisms dependent on follicular Th cell development, autoreactive B cell maturation, and RANKL induction but independent of Th17 cell function. Consistent with this, in vivo administration of soluble the IL-21R-Fc fusion protein delayed the onset and progression of arthritis. Our findings suggest that effective targeting of IL-21-mediated processes may be useful in treating autoimmune arthritis.