CD4(+)CD25+ T regulatory (Treg) cells have been shown to critically regulate self and allograft tolerance in mice. Studies of human Treg cells have been hindered by low numbers present in peripheral blood and difficult purification. We found that cord blood was a superior source for Treg-cell isolation and cell line generation compared with adult blood. Cord blood CD4(+)CD25+ cells were readily purified and generated cell lines that consistently exhibited potent suppressor activity, with more than 95% suppression of allogeneic mixed lymphocyte reactions (MLRs) (29 of 30 donors). Cultured Treg cells blocked cytokine accumulation in MLRs, with a less robust inhibition of chemokine production. These cell lines uniformly expressed CD25, CD62L, CCR7, CD27, and intracellular cytotoxic T-lymphocyte antigen-4 (CTLA4). FoxP3 protein, but not mRNA, was specifically expressed. Upon restimulation with anti-CD3/CD28 beads, the cultured Treg cells produced minimal cytokines (interleukin-2 [IL-2], interferon-gamma [IFN-gamma], and IL-10) and preferentially expressed tumor growth factor-beta (TGF-beta) latency associated protein. Cytokine production, however, was restored to normal levels by restimulation with phorbol myristate acetate (PMA)/ionomycin. Cord blood-derived cultured suppressor cell function was predominantly independent of IL-10 and TGF-beta. These results demonstrate cord blood contains a significant number of Treg precursor cells capable of potent suppressor function after culture activation. Banked cord blood specimens may serve as a readily available source of Treg cells for immunotherapy.