Fusion proteins containing B7-H4 polypeptides are disclosed. The B7-H4 fusion proteins can include full-length B7-H4 polypeptides, or can contain a fragment of a full-length B7-H4 polypeptide, including some or all of the extracellular domain of the B7-H4 polypeptide. Methods for using the fusion proteins to downregulate T cell activation and for the treatment of inflammatory and autoimmune diseases and disorders are also disclosed. The B7-H4 fusion proteins are useful for treating inflammation by inhibiting or reducing differentiation, proliferation, activity, and/or cytokine production and/or secretion by ThI, ThI 7, Th22, and/or other cells that secrete, or cause other cells to secrete, inflammatory molecules, including, but not limited to, IL-1β, TNF-α, TGF-beta, IFN-γ, IL-17, IL-6, IL-23, IL-22, IL-21, and MMPs; or enhancing IL-IO secretion by Tregs, increasing the differentiation of Tregs, increasing the number of Tregs, or combinations thereof.