The immunoproteasome generates peptides presented on MHC class I molecules to cytotoxic T cells. ONX 0914 (formerly called PR-957) is a selective inhibitor of the immunoproteasome subunit low molecular mass polypeptide (LMP) 7 (β5i) that attenuates disease progression in mouse models of diabetes, colitis, and arthritis. The aim of this study was to investigate the effect of LMP7-specific inhibition on major Th cell differentiation pathways involved in the progression of autoimmune diseases in vitro and in vivo. We used ONX 0914-treated wild-type CD4+ T cells and also LMP7−/− CD4+ T cells under different Th cell-polarizing conditions, focusing on the effector cytokines and transcription factors involved, and compared them with wild-type CD4+ T cells. Mouse models of dextran sodium sulfate-induced colitis and a T cell transfer model of colitis were used for in vivo assessment. Deletion or inhibition of LMP7 suppressed generation of Th17 but promoted regulatory T cell (Treg) development. In developing Th17 cells, immunoproteasome inhibition blocked phosphorylation of STAT3, whereas in Tregs, SMAD phosphorylation was enhanced. Additionally, LMP7 inhibition led to reduced STAT1 phosphorylation and Th1 differentiation. These findings were confirmed in vivo as LMP7 inhibition or deficiency resulted in reduced Th1 and Th17 expansion while promoting Treg development in dextran sodium sulfate-induced colitis. Also, in a T cell-dependent transfer model of colitis, LMP7-specific inhibition led to reduced Th1 and Th17 differentiation in vivo. LMP7 governs Th cell lineage determination by affecting the balance of receptor proximal signals during differentiation. These data render LMP7 a promising drug target for the treatment of autoimmune diseases.