Both CTLA-4 and TGF-β have been implicated in suppression by CD4+CD25+ regulatory T cells (Treg). In this study, the relationship between CTLA-4 and TGF-β in Treg function was examined. Blocking CTLA-4 on wild-type Treg abrogated their suppressive activity in vitro, whereas neutralizing TGF-β had no effect, supporting a TGF-β-independent role for CTLA-4 in Treg-mediated suppression in vitro. In CTLA-4-deficient mice, Treg development and homeostasis was normal. Moreover, Treg from CTLA-4-deficient mice exhibited uncompromised suppressive activity in vitro. These CTLA-4-deficient Treg expressed increased levels of the suppressive cytokines IL-10 and TGF-β, and in vitro suppression mediated by CTLA-4–/– Treg was markedly reduced by neutralizing TGF-β, suggesting that CTLA-4-deficient Treg develop a compensatory suppressive mechanism through CTLA-4-independent production of TGF-β. Together, these data suggest that CTLA-4 regulates Treg function by two distinct mechanisms, one during functional development of Treg and the other during the effector phase, when the CTLA-4 signaling pathway is required for suppression. These results help explain contradictions in the literature and support the existence of functionally distinct Treg.