Leflunomide is one of the most promising disease-modifying antirheumatic drug now in clinical trials for the treatment of rheumatoid arthritis. Metabolic studies have indicated that leflunomide is rapidly processed in vivo to an active metabolite, A771726 (2). To identify the chemical characteristics necessary for the immunosuppressive activity of 2, configurational and conformational studies were carried out on the latter and its inactive analogues (ethyl 3-hydroxy-2-((4-(trifluoromethyl)phenyl)carbamoyl)but-2-enoate, 3a, and 3-hydroxy-2-nitro-N-(4-(trifluoromethyl)phenyl)but-2-enamide, 3b). These studies suggested that the pharmacophore responsible for the immunosuppressive activity of 2 is a beta-keto amide with the enolic hydroxy group cis to the amidic moiety. To verify this hypothesis, a new class of immunosuppressive agents was designed and synthesized. Their testing in vitro and in vivo identified compounds which were more potent than both leflunomide and 2 and above all confirmed our hypothesis as to the key structural and chemical determinants for the immunosuppressive properties of 2 and our compounds.