Multiple sclerosis (MS) is an autoimmune inflammatory disease of the central nervous system with demyelination, axon damage, and paralysis. Induction of mixed chimerism with allogeneic donors has been shown to not cause graft-versus-host disease (GVHD) in animal models and humans. We have reported that induction of MHC-mismatched mixed chimerism can cure autoimmunity in autoimmune NOD mice, but this approach has not yet been tested in animal models of MS, such as experimental autoimmune encephalomyelitis (EAE). Here, we report that MHC-mismatched mixed chimerism with C57BL/6 (H-2^b) donor in SJL/J (H-2^s) EAE recipients eliminates clinical symptoms and prevents relapse. This cure is demonstrated by not only disappearance of clinical signs but also reversal of autoimmunity; elimination of infiltrating T, B, and macrophage cells in the spinal cord; and regeneration of myelin sheath. The reversal of autoimmunity is associated with a marked reduction of autoreactivity of CD4⁺ T cells and significant increase in the percentage of Foxp3⁺ Treg among host-type CD4⁺ T cells in the spleen and lymph nodes. The latter is associated with a marked reduction of the percentage of host-type CD4⁺CD8⁺ thymocytes and an increase of Treg percentage among the CD4⁺CD8⁺ and CD4⁺CD8⁻ thymocytes. Thymectomy leads to loss of prevention of EAE relapse by induction of mixed chimerism, although there is a dramatic expansion of host-type Treg cells in the lymph nodes. These results indicate that induction of MHC-mismatched mixed chimerism can restore thymic negative selection of autoreactive CD4⁺ T cells, augment production of Foxp3⁺ Treg, and cure EAE.