Pluripotent stem cells (PSCs) have the potential to produce almost all of the cells in the body, including regulatory T cells (Tregs). However, the exact conditions required for the development of antigen (Ag)-specific Tregs from PSCs (i.e., PSC-Tregs) are not well delineated. Ag-specific PSC-Tregs can be tissue/organ-associated and migrate to local inflamed tissues/organs to suppress the autoimmune response after adoptive transfer, thereby avoiding potential overall immunosuppression from non-specific Tregs. In this study, we developed a new approach to generate functional Ag-specific Tregs from induced PSCs (iPSCs), i.e., iPSC-Tregs, which had the ability to generate an Ag-specific immunosuppressive response in a murine model of arthritis. We retrovirally transduced murine iPSCs with a construct containing genes of Ag-specific T cell receptor (TCR) and the transcriptional factor FoxP3. We differentiated the iPSCs into Ag-specific iPSC-Tregs using in vitro or in vivo Notch signaling, and demonstrated that adoptive transfer of such Tregs dramatically suppressed autoimmunity in a well-established Ag-induced arthritis model, including the inflammation, joint destruction, cartilage prostaglandin depletion, osteoclast activity, and Th17 production. Our results indicate that PSCs can be used to develop Ag-specific Tregs, which have a therapeutic potential for Treg-based therapies of autoimmune disorders.