Administration of IL-21 results in decreasing autoimmune responses and thereby provides a beneficial treatment for autoimmune diseases. Specific autoimmune diseases that may be treated include multiple sclerosis, rheumatoid arthritis, systemic lupus erythematosus, psoriasis, ankylosing spondilitis, scleroderma, Type I diabetes, psoriatic arthritis, osteoarthritis, inflammatory bowel disease, atopic dermatitis and asthma. Pharmaceutical compositions can include IL-21 polypeptides and active fragments thereof.