Proprotein convertases (PC) are a family of proteases that cleave target proproteins at basic aminoacids, generating mature, biologically active polypeptides. Furin, the founding member of this family, is reported to have a number of potential substrates. However, germline deletion of fur is embryonically lethal1, and therefore the cell-type specific functions of furin remain poorly understood. Although furin is one of the predominant PC family members expressed by T cells, is induced by T cell activation and is a direct target of Stat family transcription factors2, the function of furin in T cells is also not clear. Herein, we show that conditional deletion of furin in T cells results in loss of peripheral tolerance characterized by activated T cells that overproduce both Th1 and Th2 type cytokines, circulating autoantibodies and development of inflammatory bowel disease. PCs are reportedly involved in the processing of several key immunoregulatory cytokines and we found that furin-deficient T cells have impaired production of the anti-inflammatory cytokine TGFβ-1. Like TGFβ-1-deficient T regulatory (Treg) cells, furin-deficient Treg cells, are less protective in a T cell transfer colitis model in vivo. Furthermore, furin-deficient effector cells were found to be resistant to suppressive activity of wild-type Tregs. Our results indicate that furin is indispensable in maintaining peripheral tolerance, which is due, at least in part, to its nonredundant, essential function in regulating TGFβ-1 production and controlling the levels of bioavailable TGFβ-1. These findings shed light on the specific function of furin as a T cell activation gene that modulates an important immunosuppressive cytokine. However, the results may also have broader implications, as targeting furin has emerged as a strategy in malignant and infectious disease3, 4. The current work suggests that inhibiting furin might activate immune responses, but may result in a breakdown in peripheral tolerance.