CD4(+)CD25(+) T cells have been identified as a population of immunoregulatory T cells, which mediate suppression of CD4(+)CD25(-) T cells by cell-cell contact and not secretion of suppressor cytokines. In this study, we demonstrated that CD4(+)CD25(+) T cells do produce high levels of transforming growth factor (TGF)-beta1 and interleukin (IL)-10 compared with CD4(+)CD25(-) T cells when stimulated by plate-bound anti-CD3 and soluble anti-CD28 and/or IL-2, and secretion of TGF-beta1 (but not other cytokines), is further enhanced by costimulation via cytotoxic T lymphocyte-associated antigen (CTLA)-4. As in prior studies, we found that CD4(+)CD25(+) T cells suppress proliferation of CD4(+)CD25(-) T cells; however, we observed here that such suppression is abolished by the presence of anti-TGF-beta. In addition, we found that CD4(+)CD25(+) T cells suppress B cell immunoglobulin production and that anti-TGF-beta again abolishes such suppression. Finally, we found that stimulated CD4(+)CD25(+) T cells but not CD4(+)CD25(-) T cells express high and persistent levels of TGF-beta1 on the cell surface. This, plus the fact that we could find no evidence that a soluble factor mediates suppression, strongly suggests that CD4(+)CD25(+) T cells exert immunosuppression by a cell-cell interaction involving cell surface TGF-beta1.