In transplantation research, the achievement of life-long tolerance for the graft without the need for immunosuppressive drugs, is a major goal. In the immune system various mechanisms are in place that help to prevent unwanted immunity. These mechanisms of peripheral tolerance include deletion, anergy, ignorance and suppression. In the last decade it has been demonstrated convincingly that a naturally occurring subset of CD4+ T cells, the so-called CD4+CD25+ regulatory T cells, play a key role in the suppression/regulation of immune responses. These cells have been shown to exist in mice, rats and humans, and can be found in thymus, peripheral blood, lymphoid organs and at sites of inflammation. CD4+CD25+ regulatory T cells can down-regulate the immune response by affecting T cell responses, antibody production, cytokine secretion and antigen-presenting cells. CD4+CD25+ regulatory T cells are generated in the thymus, but importantly recent evidence suggests that they can also be generated in the periphery. This latter finding is of particular importance for transplantation immunology, since it suggests that specific manipulation or induction of these cells is achievable in vivo. Here we review the recent developments on the CD4+CD25+ regulatory T cells and we discuss the potential use of these cells in transplantation immunology.