Blockade of the CD40/CD154 pathway potently attenuates T-cell responses in models of autoimmunity, inflammation, and transplantation. Indeed, CD40 pathway blockade remains one of the most powerful methods of prolonging graft survival in models of transplantation. But despite this effectiveness, the cellular and molecular mechanisms underlying the protective effects of CD40 pathway blockade are incompletely understood. Furthermore, the relative contributions of deletion, anergy, and regulation have not been measured in a model in which donor-reactive CD4(+) and CD8(+) T-cell responses can be assessed simultaneously. To investigate the impact of CD40/CD154 pathway blockade on graft-specific T-cell responses, a transgenic mouse model was used in which recipients containing ovalbumin-specific CD4(+) and CD8(+) TCR transgenic T cells were grafted with skin expressing ovalbumin in the presence or absence of anti-CD154 and donor-specific transfusion. The results indicated that CD154 blockade altered the kinetics of donor-reactive CD8(+) T-cell expansion, delaying differentiation into IFN-γ(+) TNF(+) multifunctional cytokine producers. The eventual differentiation of cytokine-producing effectors in tolerant animals coincided with the emergence of an antigen-specific CD4(+) CD25(hi) Foxp3(+) T-cell population, which did not arise from endogenous natural T(reg) but rather were peripherally generated from naïve Foxp3(-) precursors.