Abstract CD4+CD25+ regulatory T cell (Treg) entry into secondary lymphoid organs and local expansion is critical for their immunosuppressive function. Long-term application of the sphingosine-1 phosphate receptor agonist FTY720 exerts pleiotropic anti-inflammatory effects, whereas short-term FTY720 boosts antiviral immunity. In this study, we provide evidence that FTY720 potently inhibits Treg proliferation in vitro and in vivo without affecting their viability, phenotype, or in vitro immunosuppression. In contrast, adoptively transferred Treg exposed ex vivo to FTY720 lost their protective effects in murine models of acute glomerulonephritis and acute graft-vs-host disease. On a cellular level, FTY720 inhibits IL-2-induced STAT-5 phosphorylation, paralleled by a loss of FoxP3 expression during Treg expansion in vitro. Notably, loss of in vivo immunosuppression is not due to impaired migration to or localization within secondary lymphoid organs. We could even show a selective trapping of adoptively transferred Treg in inflammatory lymph nodes by FTY720. Finally, Treg isolated from animals systemically exposed to FTY720 also exhibit a significantly impaired proliferative response upon restimulation when compared with Treg isolated from solvent-treated animals. In summary, our data suggest that sphingosine-1 phosphate receptor-mediated signals induced by FTY720 abrogate their in vivo immunosuppressive potential by blocking IL-2 induced expansion, which is indispensable for their in vivo immunosuppressive activity.