Localized upregulation of Type I IFN was previously implicated in development of Borrelia burgdorferi induced arthritis in C3H mice, and was remarkable due to its absence in the mildly arthritic C57BL/6 (B6) mice. Independently, forward genetics analysis identified a quantitative trait locus (QTL) on Chr4, termed Bbaa1 that regulates Lyme arthritis severity and includes the 15 Type I IFN genes. Involvement of Bbaa1 in arthritis development was confirmed in B6 mice congenic for the C3H allele of Bbaa1 (B6.C3-Bbaa1), which developed more severe Lyme arthritis and K/B×N model of rheumatoid arthritis (RA) than did parental B6 mice. Administration of a Type I IFN receptor blocking mAb reduced the severity of both Lyme arthritis and RA in B6.C3-Bbaa1 mice, formally linking genetic elements within Bbaa1 to pathological production of Type I IFN. Bone marrow derived macrophages (BMDM) from Bbaa1 congenic mice implicated this locus as a regulator of Type I IFN induction and downstream target gene expression. Bbaa1 mediated regulation of IFN inducible genes was upstream of IFN receptor dependent amplification, however, the overall magnitude of the response was dependent on autocrine/paracrine responses to IFNβ. Additionally, the Bbaa1 locus modulated the functional phenotype ascribed to BMDM: the B6 allele promoted expression of M2 markers while the C3H allele promoted induction of M1 responses. This report identifies a genetic locus physically and functionally linked to Type I IFN that contributes to the pathogenesis of both Lyme and rheumatoid arthritis.