Chronic arthritis is characterized by persistent joint inflammation and concomitant joint destruction. IL-17 is a novel proinflammatory T-cell cytokine suspected to be involved in inflammatory and autoimmune diseases such as rheumatoid arthritis. Here, we report that IL-17 receptor (IL-17R) signaling is required in resident synovial cells for full progression of chronic synovitis and bone erosion. Repeated injections of Gram-positive bacterial cell wall fragments (SCW) directly into the knee joint of naïve IL-17R-deficient (IL-17R^-/-) mice had no effect on the acute phase of arthritis but prevented progression to chronic destructive synovitis as was noted in wild-type (wt) mice. Micro-array analysis revealed significant down-regulation of leukocyte-specific chemokines, selectins, collagenase-3, and IL-1 in the synovium of IL-17R^-/- mice. Bone marrow (BM) chimeric mice revealed the need for IL-17/IL-17R signaling in resident synovial cells for development of full blown synovitis. Chimeric mice of host wt and donor IL-17R^-/- BM cells developed destructive synovitis in this chronic relapsing SCW arthritis model similar to wt → wt chimeras. In contrast, chimeric mice of host IL-17R^-/- and donor wt BM cells were protected from full blown destructive arthritis similar to IL-17R^-/- → IL-17R^-/- chimeras. These data strongly suggest T-cell IL-17-IL-17R signaling in resident synovial cells to be a pivotal mechanism through which an acute macrophage-driven joint inflammation progresses into a chronic destructive synovitis. Prevention of local synovial IL-17-IL-17R signaling warrants consideration as a therapeutic target in chronic destructive arthritis.