Dendritic cells (DCs) conditioned with the mammalian target of rapamycin (mTOR) inhibitor rapamycin have been previously shown to expand naturally existing regulatory T cells (nTregs). This work addresses whether rapamycin-conditioned donor DCs could effectively induce CD4(+)CD25(+)Foxp3(+) Tregs (iTregs) in cell cultures with alloantigen specificities, and whether such in vitro-differentiated CD4(+)CD25(+)Foxp3(+) iTregs could effectively control acute rejection in allogeneic islet transplantation. We found that donor BALB/c bone marrow-derived DCs (BMDCs) pharmacologically modified by the mTOR inhibitor rapamycin had significantly enhanced ability to induce CD4(+)CD25(+)Foxp3(+) iTregs of recipient origin (C57BL/6 (B6)) in vitro under Treg driving conditions compared to unmodified BMDCs. These in vitro-induced CD4(+)CD25(+)Foxp3(+) iTregs exerted donor-specific suppression in vitro, and prolonged allogeneic islet graft survival in vivo in RAG(-/-) hosts upon coadoptive transfer with T-effector cells. The CD4(+)CD25(+)Foxp3(+) iTregs expanded and preferentially maintained Foxp3 expression in the graft draining lymph nodes. Finally, the CD4(+)CD25(+)Foxp3(+) iTregs were further able to induce endogenous naïve T cells to convert to CD4(+)CD25(+)Foxp3(+) T cells. We conclude that rapamycin-conditioned donor BMDCs can be exploited for efficient in vitro differentiation of donor antigen-specific CD4(+)CD25(+)Foxp3(+) iTregs. Such in vitro-generated donor-specific CD4(+)CD25(+)Foxp3(+) iTregs are able to effectively control allogeneic islet graft rejection.