Regulatory T (T(reg)) cells are a critical sub-population of CD4+ T cells that are essential for maintaining self tolerance and preventing autoimmunity, for limiting chronic inflammatory diseases, such as asthma and inflammatory bowel disease, and for regulating homeostatic lymphocyte expansion. However, they also suppress natural immune responses to parasites and viruses as well as anti-tumour immunity induced by therapeutic vaccines. Although the manipulation of T(reg) function is an important goal of immunotherapy, the molecules that mediate their suppressive activity remain largely unknown. Here we demonstrate that Epstein-Barr-virus-induced gene 3 (Ebi3, which encodes IL-27beta) and interleukin-12 alpha (Il12a, which encodes IL-12alpha/p35) are highly expressed by mouse Foxp3+ (forkhead box P3) T(reg) cells but not by resting or activated effector CD4+ T (T(eff)) cells, and that an Ebi3-IL-12alpha heterodimer is constitutively secreted by T(reg) but not T(eff) cells. Both Ebi3 and Il12a messenger RNA are markedly upregulated in T(reg) cells co-cultured with T(eff) cells, thereby boosting Ebi3 and IL-12alpha production in trans. T(reg)-cell restriction of this cytokine occurs because Ebi3 is a downstream target of Foxp3, a transcription factor that is required for T(reg)-cell development and function. Ebi3-/- and Il12a-/- T(reg) cells have significantly reduced regulatory activity in vitro and fail to control homeostatic proliferation and to cure inflammatory bowel disease in vivo. Because these phenotypic characteristics are distinct from those of other IL-12 family members, this novel Ebi3-IL-12alpha heterodimeric cytokine has been designated interleukin-35 (IL-35). Ectopic expression of IL-35 confers regulatory activity on naive T cells, whereas recombinant IL-35 suppresses T-cell proliferation. Taken together, these data identify IL-35 as a novel inhibitory cytokine that may be specifically produced by T(reg) cells and is required for maximal suppressive activity.