CD4+CD25+ regulatory T cells are essential for the active suppression of autoimmunity. Here we report that the forkhead transcription factor Foxp3 is specifically expressed in CD4+CD25+ regulatory T cells and is required for their development. The lethal autoimmune syndrome observed in Foxp3-mutant scurfy mice and Foxp3-null mice results from a CD4+CD25+ regulatory T cell deficiency and not from a cell-intrinsic defect of CD4+CD25- T cells. CD4+CD25+ regulatory T cells rescue disease development and preferentially expand when transferred into neonatal Foxp3-deficient mice. Furthermore, ectopic expression of Foxp3 confers suppressor function on peripheral CD4+CD25- T cells. Thus, Foxp3 is a critical regulator of CD4+CD25+ regulatory T cell development and function.