Objective. The roles of the transmembrane and secreted forms of tumor necrosis factor α (TNFα) in rheumatoid arthritis (RA) remain unclear. Agents used to inhibit TNFα have shown varying efficacy in RA patients, suggesting that anti-TNFα agents possess dissimilar mechanisms of action, including the ability to neutralize transmembrane (tmTNFα) and secreted TNFα. In this study, TNFα-knockout (TNFα-KO) mice that were genetically altered to express elevated levels of tmTNFα were constructed to further understand the roles of the 17-kd secreted, trimeric, and 26-kd transmembrane forms of TNFα. Methods. A speed-congenic mating scheme was used to generate 3 unique strains of mice: 1) transgenic tmTgA86 mice overexpressing 26-kd tmTNFα and also secreting 17-kd trimeric TNFα (tmTNFα-transgenic), 2) TNFα-/- mice (TNFα-KO), and 3) transgenic mice overexpressing tmTNFα backcrossed to TNFα-KO mice (tmTNFα-transgenic/TNFα-KO). Mice were treated with phosphate buffered saline (as vehicle control), dexamethasone (as positive control), or modified recombinant human soluble TNF receptor (sTNFR) p55 or p75, and were assessed clinically and histopathologically for signs of inflammation and development of arthritis. Results. The tmTNFα-transgenic/TNFα-KO mice were born with crinkled tails and spinal deformities similar to those in ankylosing spondylitis. By 2-4 weeks, these mice developed symmetric inflammatory arthritis, characterized by tissue swelling, pannus formation, and bone deformities. The tmTNFα-transgenic mice also developed spontaneous-onset arthritis, but at a slower rate (100% incidence by 10-12 weeks). Clinical and histologic progression of arthritis in the tmTNFα-transgenic/TNFα-KO mice was reduced by treatment with dexamethasone or with the p55 or p75 sTNFR (69% and 63% reduction in total histologic score, respectively). Conclusion. These data show that arthritis is sufficiently initiated and maintained in tmTNFα-transgenic/TNFα-KO mice, and that it can be neutralized by recombinant human p55 or p75 sTNFR, resulting in amelioration of the biologic and subsequent histologic destructive effects of tmTNFα. © 2006, American College of Rheumatology.