Multiple sclerosis (MS) is an inflammatory disease of the central nervous system associated with demyelination and axonal loss. A whole genome association scan suggested that allelic variants in the CD58 gene region, encoding the costimulatory molecule LFA-3, are associated with risk of developing MS. We now report additional genetic evidence, as well as resequencing and fine mapping of the CD58 locus in patients with MS and control subjects. These efforts identify a CD58 variant that provides further evidence of association with MS (P = 1.1 × 10⁻⁶, OR 0.82) and the single protective effect within the CD58 locus is captured by the rs2300747^G allele. This protective rs2300747^G allele is associated with a dose-dependent increase in CD58 mRNA expression in lymphoblastic cell lines (P = 1.1 × 10⁻¹⁰) and in peripheral blood mononuclear cells from MS subjects (P = 0.0037). This protective effect of enhanced CD58 expression on circulating mononuclear cells in patients with MS is supported by finding that CD58 mRNA expression is higher in MS subjects during clinical remission. Functional investigations suggest a potential mechanism whereby increases in CD58 expression, mediated by the protective allele, up-regulate the expression of transcription factor FoxP3 through engagement of the CD58 receptor, CD2, leading to the enhanced function of CD4⁺CD25^high regulatory T cells that are defective in subjects with MS.