The development of natural Foxp3(+) CD4 regulatory T cells (nTregs) proceeds via two steps that involve the initial antigen dependent generation of CD25(+)GITR(hi)Foxp3(-)CD4(+) nTreg precursors followed by the cytokine induction of Foxp3. Using mutant mouse models that lack c-Rel, the critical NF-κB transcription factor required for nTreg differentiation, we establish that c-Rel regulates both of these developmental steps. c-Rel controls the generation of nTreg precursors via a haplo-insufficient mechanism, indicating that this step is highly sensitive to c-Rel levels. However, maintenance of c-Rel in an inactive state in nTreg precursors demonstrates that it is not required for a constitutive function in these cells. While the subsequent IL-2 induction of Foxp3 in nTreg precursors requires c-Rel, this developmental transition does not coincide with the nuclear expression of c-Rel. Collectively, our results support a model of nTreg differentiation in which c-Rel generates a permissive state for foxp3 transcription during the development of nTreg precursors that influences the subsequent IL-2 dependent induction of Foxp3 without a need for c-Rel reactivation.