The helminth defense molecules (HDM) are a family of immune regulatory peptides exclusively expressed by trematode worms. We have previously demonstrated that in vivo FhHDM-1, the archetypal member of the HDMs, regulated macrophage responses to inflammatory ligands, thereby ameliorating the progression of immune-mediated tissue damage in several murine models of inflammatory disease. Accordingly, we postulated that an understanding of the structure-function relationship of the HDMs would facilitate the identification of the minimal bioactive peptide, which would represent a more synthesizable, cost-effective, potent biotherapeutic. Thus, using a combination of bioinformatics, structural analyses, and cellular assays we discovered a 40 amino acid peptide derivative termed FhHDM-1.C2. This peptide contains a 12 amino acid motif at its N-terminus, which facilitates cellular interaction and uptake, and an amphipathic α-helix within the C-terminus, which is necessary for lysosomal vATPase inhibitory activity, with both regions linked by a short unstructured segment. The FhHDM-1.C2 peptide exhibits enhanced regulation of macrophage function, compared with the full-length FhHDM-1, and potent prevention of the progression of relapsing-remitting-experimental autoimmune encephalomyelitis (EAE) when administered prophylactically or therapeutically. The protective effect of FhHDM-1.C2 is not associated with global immune suppression, which places the HDMs peptides as an improved class of biotherapeutics for the treatment of inflammatory diseases. Comparing the HDMs from several zoonotic trematodes revealed a similar capacity for immune regulation. These important new advances into the structure-function relationship of the lead HDM peptide, FhHDM-1, encourage further prospecting and screening of the broader trematode family of peptides for the discovery of novel and potent immune-biotherapeutics.