A unique population of CD4(+) T lymphocytes that constitutively express CD25 has been recognized as anergic/suppressor cells. While the immunosuppressive activity of these CD4(+)CD25(+) cells has been validated and implicated in tolerance, autoimmunity, transplantation, cancer and infectious diseases, the mechanism(s) by which they function still remains controversial. Although the involvement of TGF-beta was initially discounted, emerging evidence now links this cytokine with CD4(+)CD25(+) T cell-mediated suppression of antigen-activated T cells. In this perspective, we summarize recently published studies, as well as our own data, which shed light on how cell membrane-bound TGF-beta can deliver a regulatory signal to target cells via a contact-dependent process. Moreover, suppressor T cell function is a complex process, tightly regulated by multiple factors, including IL-2, cytotoxic T lymphocyte-associated antigen-4 (CTLA-4) and glucocorticoid induced TNF receptor (GITR). Collectively, multiple previously unconnected puzzle pieces are beginning to be linked into a more coherent, albeit incomplete picture of CD4(+)CD25(+) T cell-mediated suppression.