Background and Purpose: Peptides derived from retroviral envelope proteins have been shown to possess a wide range of immunosuppressive and anti-inflammatory activities. We have previously reported identification of such a peptide derived from the envelope protein coded by a human endogenous retrovirus (HERV). In this study we assessed effects of this peptide treatment on inhibition of immune response in the DSS-induced mice model of colitis. Furthermore, we identified that in vitro the peptide inhibits the KCa3.1 potassium channel, a potential target for therapy of immune diseases. Experimental Approach: We characterized an immunosuppressive peptide ENV59, from a specific HERV envelope protein, in vivo effects on inflammation control in acute colitis mice model and in vitro on the production of pro-inflammatory cytokines. Furthermore, we described in vitro ENV59-GP3 effects with respect to potency of inhibition on KCa3.1 channels and calcium influx. Key Results: ENV59-GP3 peptide treatment showed reduction of the disease score in the DSS-induced acute colitis mice model, which was comparable to effects of the KCa3.1 channel blocker NS6180. Analysis of cytokine production from DSS-mice model treated animals revealed equipotent inhibitory effects of the ENV59-GP3 and NS6180 compounds on the production of IL-6, TNF-α, IL-1β. Patch clamp studies show that the peptide ENV59-GP3 is a blocker of the potassium channel KCa3.1. Conclusion and Implications: Env59-GP3 represents KCa3.1 channel inhibitor underlining the implications of using virus derived channel blockers for treatment of autoimmune diseases. There are no drugs with a similar mechanism of action currently on the market.