The molecular mechanisms leading to the development of chronic lung allograft dysfunction following de novo development of antibodies to mismatched donor MHC remain undefined. We demonstrated that intrabronchial administration of antibodies to MHC class I resulted in induction of both innate and adaptive cellular immune responses characterized by a predominance of Th17 specific to lung associated self-antigens Kα1-tubulin and Collagen-V leading to the development of obliterative airway lesions (OAD), correlate of chronic rejection following human lung transplantation. To determine the role of regulatory T cells (Treg) in the pathogenesis of OAD, we administered anti-MHC class I to mice, in which Treg were depleted by conditional ablation of FoxP3+cells. Under this condition, we observed a threefold increase in pulmonary cellular infiltration, luminal occlusion and fibrous deposition when compared anti-MHC class I Ab administered mice maintaining FoxP3. OAD lesions were accompanied with enhanced accumulation of neutrophils along with self-antigen-specific Th17 and humoral responses. However, IL-17-blockade or adoptive transfer of Treg abrogated OAD. We conclude that Treg exerts a suppressive effect on anti-MHC induced IL-8-mediated neutrophil infiltration and innate immune responses that leads to inhibition of Th17 immune responses to lung associated self-antigens which is critical for development of OAD. Selective ablation of FoxP 3+ T regulatory cells exerts significant suppression of anti-MHC induced IL-8 mediated neutrophil infiltration and innate immune responses leading to Th17 mediated autoimmunity to lung associated self-antigens culminating in anti-MHC induced obliterative airway disease.