The move follows YouTube videos posted by some Tesla drivers that show what appear to be near-misses on the road with Autopilot.
"I'm not aware of any cases where Autopilot caused an accident," said Tesla CEO Elon Musk in a media conference call. "In fact, even the cases where people did pretty crazy things — set the car in autonomous mode and got into the backseat — none of those resulted in accidents."
The Autosteer feature in what Tesla calls Autopilot 7.1 software is now restricted on residential roads and roads without a center divider.
"When Autosteer is engaged on a restricted road, Model S's speed will be limited to the speed limit of the road plus an additional 5 mph," said Tesla in a statement. "When entering such a restricted road, Model S will reduce its speed if necessary and will do so even if you increase the cruise control set speed."
The system will also reduce speed in anticipation of curves on the highway.
When Autopilot debuted last October, Musk warned that "hands-off" driving was not recommended.
Still, during Sunday's conference call, Musk said that Autopilot "is probably better than human at this point in highway driving."
He added: "It is certainly better than a human at staying in the center of the lane."
In addition to the new restrictions, Model S drivers can now park their cars from outside the vehicle using the "summon" mode.
"This feature is especially useful for parking in tight spaces and narrow garages," the automaker said.
The cars can also park themselves in perpendicular parking spaces.
Within two years, the "summon" feature will enable a driver to summon the car from across the country, Musk said.
"It will find its way to you and meet you," he said. "Your phone will tell the car where to find you."
Musk is predicting that fully autonomous cars will arrive in 24-36 months.
He also said the automaker is working on a new "hardware suite" for the Model S, but noted "it will be some time before that enters production."
Edmunds says: Tesla's Elon Musk makes some tantalizing predictions about self-driving cars on the eve of the 2016 Detroit Auto Show, even as the automaker curbs some of the autonomous features of its current system.