Although T-cell clones bearing T-cell receptors with high affinity for self-peptide major histocompatibility complex (MHC) products are generally eliminated in the thymus (recessive tolerance), the peripheral T-cell repertoire remains strongly biased toward self-peptide MHC complexes and includes autoreactive T cells. A search for peripheral T cells that might exert dominant inhibitory effects on autoreactivity has implicated a subpopulation of CD4(+)CD25(+) T cells called regulatory T cells (Tregs). Here, we discuss the role of cytokines and costimulatory molecules in the generation, maintenance, and function of Tregs. We also summarize evidence for the involvement of Tregs in controlling autoimmune diseases, including type 1 diabetes, experimental autoimmune encephalomyelitis, and inflammatory bowel disease. Last, we discuss our recent definition of the potential role of B7 expressed on activated T-effector cells as a target molecule for Treg-dependent suppression. These observations suggest that the engagement of B7 on effector T cells transmits an inhibitory signal that blocks or attenuates effector T-cell function. We restrict our comments to the suppression mediated by cells within the CD4 lineage; the impact of the cells within the CD8 lineage that may suppress via engagement of Qa-1 on effector T cells is not addressed in this review.