T cells with immunoregulatory function have been described in human and mouse systems. In both systems these cells can be differentiated either in the thymus or from peripheral T cells. To date, more progress has been made in the study of murine regulatory T cells, because it has been very difficult to isolate human regulatory T cells of sufficient purity and in sufficient numbers to permit detailed examinations of their biochemistry. We report in this study that human T cells with regulatory function can be differentiated in vitro from naive (CD4(+)CD45RA(+)) cord blood or peripheral T cells by stimulation with anti-CD3 and anti-CD28 in the presence of TGF-beta. Cells derived in this manner express a surface phenotype (CD25(+), CD122(+), HLA-DR+, glucocorticoid-induced TNF receptor-related gene(+), CD103(+), CTLA-4(+)) described for human and mouse regulatory T cells and express protein and message for the transcription factor forkhead/winged helix transcription factor (FOXP3). They produce primarily TGF-beta and IL-10, with lesser amounts of IFN-gamma and IL-beta, when stimulated through their TCRs and 'are capable of inhibiting cytokine production and proliferation by stimulated naive T cells. Unlike Th1 and Th2 cells, these TGF-beta-derived regulatory T cells do not appear to be dependent on the protein kinase Ctheta pathway of NF-kappaB activation for Ag-induced responses.