We show that a combination of the immunosuppressive drugs, vitamin D3 and Dexamethasone, induced human and mouse naive CD4(+) T cells to differentiate in vitro into regulatory T cells. In contrast to the previously described in vitro derived CD4(+) T cells, these cells produced only interleukin (IL)-10, but no IL-5 and interferon (IFN)-gamma, and furthermore retained strong proliferative capacity. The development of these IL-10-producing cells was enhanced by neutralization of the T helper type 1 (Th1)- and Th2-inducing cytokines IL-4, IL-12, and IFN-gamma. These immunosuppressive drugs also induced the development of IL-10-producing T cells in the absence of antigen-presenting cells, with IL-10 acting as a positive autocrine factor for these T cells. Furthermore, nuclear factor (NF)-kappaB and activator protein (AP)-1 activities were inhibited in the IL-10-producing cells described here as well as key transcription factors involved in Th1 and Th2 subset differentiation. The regulatory function of these in vitro generated IL-10-producing T cells was demonstrated by their ability to prevent central nervous system inflammation, when targeted to the site of inflammation, and this function was shown to be IL-10 dependent. Generating homogeneous populations of IL-10-producing T cells in vitro will thus facilitate the use of regulatory T cells in immunotherapy.