Foxp3-expressing regulatory T cells (Treg) have an essential function of preventing autoimmune disease in man and mouse. Foxp3 binds to forkhead motifs of about 1,100 genes and the strength of binding increases upon phorbol 12-myristate 13-acetate/ionomycin stimulation. In Foxp3-expressing T cell hybridomas, Foxp3 promoter binding does not lead to activation or suppression of genes which becomes only visible after T cell activation. These findings are in line with observations by others that Foxp3 exerts important functions in collaboration with T cell receptor (TCR)-dependent transcription factors in a DNA-binding complex. Tregs can be generated when developing T cells encounter TCR agonist ligands in the thymus. This process apparently depends on costimulatory signals. In contrast, extrathymic conversion of naïve T cells into Tregs appears to depend on transforming growth factor (TGF)-beta and is inhibited by costimulation. In fact, dendritic cell-derived retinoic acid helps the conversion process by counteracting the negative impact of costimulation. Tregs induced by subimmunogenic antigen delivery in vivo are much more stable than Tregs induced by antigenic stimulation in the presence of TGF-beta in vitro which correlates with the extent of demethylation of the Foxp3 locus. Tregs can be induced by conversion of antigen-specific T cells that occur with a very low frequency in wt mice. Conversion of naïve cluster of differentiation (CD)4 T cells into Tregs by a single peptide of HY antigens results in complete antigen-specific tolerance to an entire set of HY epitopes recognized by CD4 as well as CD8 T cells when presented with male skin or hemopoietic grafts.