Formation of pathogenic antibodies is a major problem in replacement therapies for inherited protein deficiencies. For example, antibodies to coagulation factors (‘inhibitors’) seriously complicate treatment of haemophilia. While immune tolerance induction (ITI) protocols have been developed, inhibitors against factor IX (FIX) are difficult to eradicate due to anaphylactic reactions and nephrotic syndrome and thus substantially elevate risks for morbidity and mortality. However, hepatic gene transfer with an adeno‐associated virus (AAV) serotype 8 vector expressing FIX (at levels of ≥4% of normal) rapidly reversed pre‐existing high‐titre inhibitors in haemophilia B mice, eliminated antibody production by B cells, desensitized from anaphylaxis (even if protein therapy was resumed) and provided long‐term correction. High levels of FIX protein suppressed memory B cells and increased Treg induction, indicating direct and indirect mechanisms of suppression of inhibitor formation. Persistent presence of Treg was required to prevent relapse of antibodies. Together, these data suggest that hepatic gene transfer‐based ITI provides a safe and effective alternative to eradicate inhibitors. This strategy may be broadly applicable to reversal of antibodies in different genetic diseases.