The binding of herpesvirus entry mediator (HVEM) to B and T lymphocyte attenuator (BTLA) is known to activate an inhibitory signaling cascade in effector T (Teff) cells, but we now report that the HVEM-BTLA pathway is also important to the suppressive function of regulatory T cells (Tregs). Although naive T cells up-regulated BTLA upon TCR activation, Treg expression of BTLA remained low, regardless of TCR activation. Moreover, BTLA(-/-) CD4(+)CD25(+) Tregs had normal suppressive activity, whereas BTLA(-/-) Teff cells were more resistant than wild-type Teff cells to suppression by Tregs, suggesting BTLA expression by Teff cells was required for their suppression by Tregs. In contrast to BTLA, HVEM expression was comparable in naive Tregs vs Teff cells, but after stimulation HVEM expression was quickly down-regulated by Teff cells, whereas HVEM was further up-regulated by Tregs. HVEM(-/-) Tregs had decreased suppressive activity as compared with wild-type Tregs, indicating that Treg expression of HVEM was required for optimal suppression. Consistent with this, T cells from Scurfy mice (FoxP3 mutant) lacked HVEM gene expression, and adoptively transferred wild-type but not HVEM(-/-) Tregs were able to control alloresponses in vivo by normal Teff cells. Our data demonstrate that Tregs can exert their effects via up-regulation of the negative costimulatory ligand HVEM, which upon binding to BTLA expressed by Teff cells helps mediate the suppressive functions of Tregs in vitro and in vivo.