On activation, T cells undergo distinct developmental pathways, attaining specialized properties and effector functions. T-helper (T(H)) cells are traditionally thought to differentiate into T(H)1 and T(H)2 cell subsets. T(H)1 cells are necessary to clear intracellular pathogens and T(H)2 cells are important for clearing extracellular organisms. Recently, a subset of interleukin (IL)-17-producing T (T(H)17) cells distinct from T(H)1 or T(H)2 cells has been described and shown to have a crucial role in the induction of autoimmune tissue injury. In contrast, CD4+CD25+Foxp3+ regulatory T (T(reg)) cells inhibit autoimmunity and protect against tissue injury. Transforming growth factor-beta (TGF-beta) is a critical differentiation factor for the generation of T(reg) cells. Here we show, using mice with a reporter introduced into the endogenous Foxp3 locus, that IL-6, an acute phase protein induced during inflammation, completely inhibits the generation of Foxp3+ T(reg) cells induced by TGF-beta. We also demonstrate that IL-23 is not the differentiation factor for the generation of T(H)17 cells. Instead, IL-6 and TGF-beta together induce the differentiation of pathogenic T(H)17 cells from naive T cells. Our data demonstrate a dichotomy in the generation of pathogenic (T(H)17) T cells that induce autoimmunity and regulatory (Foxp3+) T cells that inhibit autoimmune tissue injury.