The hyaluronate receptor (CD44) molecule is a multifunctional cell surface protein involved in T cell activation, monocyte cytokine release, fibroblast locomotion, and lymphocyte binding to high endothelial venules. To study the roles CD44 molecules play in inflammatory synovitis, we measured expression of CD44 in inflamed and noninflamed synovial fluid and tissue, using indirect immunofluorescence assays on tissue sections and quantitative Western blot analysis. The ability of purified CD44 protein to modulate T cell responses was tested in T cell activation assays in which CD44‐containing liposomes were added in vitro. CD44 was widely expressed on many synovial cell types, and synovial tissue from rheumatoid arthritis (RA) patients contained 3.5 times more CD44 than tissue from osteoarthritis patients and 10.7 times more than tissue from patients with joint trauma. The level of soluble CD44 in RA synovial fluid was elevated only in fluids with low cell counts (≤7,000/mm³), and not in RA synovial fluid with higher cell counts. Soluble purified CD44 protein in liposomes partially suppressed T cell activation in vitro. These data demonstrate that CD44 is up‐regulated on many synovial cell types in patients with RA, and that the level of CD44 present in synovial tissue is related to the degree of synovial inflammation. Determination of ways to inhibit the proinflammatory functions of immune cell membrane CD44 molecules may provide new therapeutic modalities for RA.