Leukocyte-associated Ig-like receptor 1 (LAIR1) is an ITIM-bearing collagen receptor expressed by leukocytes and is implicated in immune suppression. However, using a divalent soluble LAIR1/Fc recombinant protein to block interaction of cell surface LAIR1 with matrix collagen, we found that whereas T h 1 responses were enhanced as predicted, T h 17 responses were strongly inhibited. Indeed, LAIR1 on both T cells and monocytes was required for optimal T h 17 responses to collagen type (Col)V. For pre-existing "natural" T h 17 response to ColV, the LAIR1 requirement was absolute, whereas adaptive T h 17 and T h 1/17 immune responses in both mice and humans were profoundly reduced in the absence of LAIR1. Furthermore, the addition of C1q, a natural LAIR1 ligand, decreased T h 1 responses in a dose-dependent manner, but it had no effect on T h 17 responses. In IL-17–dependent murine organ transplant models of chronic rejection, LAIR1 +/+ but not LAIR1 –/– littermates mounted strong fibroproliferative responses. Surface LAIR1 expression was higher on human T h 17 cells as compared with T h 1 cells, ruling out a receptor deficiency that could account for the differences. We conclude that LAIR1 ligation by its natural ligands favors T h 17 cell development, allowing for preferential activity of these cells in collagen-rich environments. The emergence of cryptic self-antigens such as the LAIR1 ligand ColV during ischemia/reperfusion injury and early acute rejection, as well as the tendency of macrophages/monocytes to accumulate in the allograft during chronic rejection, favors T h 17 over T h 1 development, posing a risk to long-term graft survival.