Regulatory T cells have emerged as an important mechanism of regulating tolerance and T cell responses. CD4+ regulatory T cells can be divided into two main groups, natural regulatory T cells, which express high levels of CD25 on their cell surface and phenotypically diverse adaptive (antigen induced) regulatory T cells. Natural regulatory T cells are made in the thymus, and require strong costimulatory signals for induction and maintenance, express a transcription factor called Foxp3, and function by a largely unknown mechanism. Adaptive (antigen induced) regulatory T cells are made by sub-optimal antigenic signals in the periphery, in the presence of immunosuppressive cytokines, often in special circumstances, such as chronic viral infections or after mucosal administration of antigen, and rely on cytokines such as IL-10 and TGF-beta for suppression. Regulatory T cells offer a great potential for the treatment of autoimmune diseases and during transplantation.