Regulatory T cells engage in the maintenance of immunological self-tolerance by actively suppressing self-reactive lymphocytes. Little is known, however, about the molecular mechanism of their development. Here we show that Foxp3, which encodes a transcription factor that is genetically defective in an autoimmune and inflammatory syndrome in humans and mice, is specifically expressed in naturally arising CD4+ regulatory T cells. Furthermore, retroviral gene transfer of Foxp3 converts naïve T cells toward a regulatory T cell phenotype similar to that of naturally occurring CD4+ regulatory T cells. Thus, Foxp3 is a key regulatory gene for the development of regulatory T cells.