Repetitive stimulation of naïve T cells by immature splenic dendritic cells (DC) can result in the differentiation of T-cell lines with regulatory properties. In the present study we identified a population of DC in the mucosae that exhibit the plasmacytoid phenotype, secrete interferon-alpha (IFN-alpha) following stimulation with oligodeoxynucleotides containing certain cytosine-phosphate-guanosine (CpG) motifs and can differentiate naïve T cells into cells that exhibit regulatory properties. Although these DC appear to be present in both spleen and mesenteric lymph nodes (MLN), only CpG-matured DC from the MLN (but not the spleen) were able to differentiate naïve T cells into T regulatory 1-like cells with regulatory properties. The activity of these DC failed to sustain robust T-cell proliferation and thereby enhanced the suppressive efficacy of CD4+ CD25+ T regulatory cells. These DC are the major CD8alpha+ DC population in the Peyer's patches (PP). Given their significant presence in mucosal tissue, we propose that these DC may provide a mechanistic basis for the homeostatic regulation in the gut by eliciting regulatory cell suppressor function and poorly supporting T helper cell proliferation at a site of high antigenic stimulation like the intestine.