Th17 cells play a critical role in host defense against extracellular pathogens and tissue homeostasis but can induce autoimmunity. The mechanisms implicated in balancing "pathogenic" and "non-pathogenic" Th17 cell states remain largely unknown. We used single-cell RNA-seq to identify CD5L/AIM as a regulator expressed in non-pathogenic, but not in pathogenic Th17 cells. Although CD5L does not affect Th17 differentiation, it is a functional switch that regulates the pathogenicity of Th17 cells. Loss of CD5L converts non-pathogenic Th17 cells into pathogenic cells that induce autoimmunity. CD5L mediates this effect by modulating the intracellular lipidome, altering fatty acid composition and restricting cholesterol biosynthesis and, thus, ligand availability for Rorγt, the master transcription factor of Th17 cells. Our study identifies CD5L as a critical regulator of the Th17 cell functional state and highlights the importance of lipid metabolism in balancing immune protection and disease induced by T cells.