The random generation of antigen receptors in developing lymphocytes results in a considerable risk of autoimmunity. Regulatory T cells (T(reg) cells) act in a dominant, trans-acting way to actively suppress immune activation and maintain immune tolerance. Here, we discuss the principal advances in our understanding of the molecular mechanisms of T(reg) cell development and function with particular emphasis on the forkhead transcription factor Foxp3. Accumulating evidence suggests that T(reg) cells represent a dedicated T cell lineage and that Foxp3 functions as the T(reg) cell lineage specification factor. The aggressive early-onset lymphoproliferative syndrome resulting from Foxp3 deficiency identifies T(reg) cells as vital mediators of immunological tolerance to self and Foxp3 as the mediator of the genetic mechanism of dominant tolerance.