Costimulation-deficient dendritic cells (DCs) prevent autoimmune disease in mouse models. However, autoimmune-prone mice and humans fail to control expansion of peripheral autoreactive effector memory T cells (TEMs), which resist immunoregulation by costimulation-deficient DCs. In contrast, activation of DC costimulation may be coupled with regulatory capacity. To test whether costimulatory DCs control TEMs and attenuate established autoimmune disease, we used RelB-deficient mice, which have multiorgan inflammation, expanded peripheral autoreactive TEMs, and dysfunctional Foxp3+ regulatory T cells (Tregs) cells and conventional DCs. TEMs were regulated by Foxp3+ Tregs when costimulated by CD3/CD28-coated beads or wild-type DCs but not DCs deficient in RelB or CD80/CD86. After transfer, RelB and CD80/CD86-sufficient DCs restored tolerance and achieved a long-term cure of autoimmune disease through costimulation of TEM and Foxp3+ Treg IFN-γ production, as well as induction of IDO by host APCs. IDO was required for regulation of TEMs and suppression of organ inflammation. Our data challenge the paradigm that costimulation-deficient DCs are required to regulate established autoimmune disease to avoid TEM activation and demonstrate cooperative cross-talk between costimulatory DCs, IFN-γ, and IDO-dependent immune regulation. IFN-γ and IDO activity may be good surrogate biomarkers measured against clinical efficacy in trials of autoimmune disease immunoregulation.