The CD4(+)CD25(+) regulatory T lymphocytes have been implicated in suppressing T cell immune responses. Our aim was to characterize the frequency, phenotype, function, and specificity of CD4(+)CD25(+) T cells in hepatitis C virus (HCV) infection. Peripheral CD4(+)CD25(+) cells from recovered (n = 15), chronic infected (n = 30), and normal control (n = 15) subjects were analyzed ex vivo for quantitation, phenotype, and effect on HCV-specific interferon gamma production and proliferation. CD4(+)CD25(+) specificity was determined by intracellular cytokine staining for interleukin 10 (IL-10). A higher proportion of CD4(+)CD25(+) were found in chronic infection (mean, 3.02%) when compared with recovered (1.64%, P = .001) and normal controls (2.27%, P = .02). CD4(+)CD25(+) cells display CD45RO(high), CD45RA(low), CD28(high), CD62L(high), and CD95(high) phenotype. HCV-specific interferon gamma activity was enhanced in peripheral blood mononuclear cells depleted of CD4(+)CD25(+) and suppressed in peripheral blood mononuclear cells enriched with CD4(+)CD25(+). Depletion of CD4(+)CD25(+) cells also enhanced HCV-specific CD4(+) and CD8(+) T cell proliferation. Cytokine analysis suggested CD4(+)CD25(+) cells secrete transforming growth factor beta (TGF-beta(1)) and IL-10. The inhibitory role for TGF-beta(1) was confirmed by anti-TGF-beta(1). Transwell studies showed CD4(+)CD25(+) mediated suppression to be dose dependent and requiring cell contact. CD4(+)CD25(+) cells showed HCV-specificity through IL-10 production, with a frequency ranging from 1.9% to 5.3%. A positive correlation was detected between CD4(+)CD25(+) T cell frequency and HCV RNA titer, whereas an inverse relation was found with liver inflammatory activity. In conclusion, CD4(+)CD25(+) T lymphocytes constitute a highly differentiated population and appear to play a role in viral persistence by suppressing HCV-specific T cell responses in a cell-cell contact manner.