TGF-beta is a pluripotent cytokine that is capable of inducing the expression of Foxp3 in naive T lymphocytes. TGF-beta-induced cells are phenotypically similar to thymic-derived regulatory T cells in that they are anergic and suppressive. We have examined the cytokine and costimulatory molecule requirements for TGF-beta-mediated induction and maintenance of Foxp3 by CD4(+)Foxp3(-) cells. IL-2 plays a non-redundant role in TGF-beta-induced Foxp3 expression. Other common gamma-chain-utilizing cytokines were unable to induce Foxp3 expression in IL-2-deficient T cells. The role of CD28 in the induction of Foxp3 was solely related to its capacity to enhance the endogenous production of IL-2. Foxp3 expression was stable in vitro and in vivo in the absence of IL-2. As TGF-beta-induced T regulatory cells can be easily grown in vitro, they may prove useful for the treatment of autoimmune diseases, for the prevention of graft rejection, and graft versus host disease.