Naturally occurring CD4+CD25+ regulatory T cells (Treg) are potent suppressors of CD4+ and CD8+ T cell responses in vitro and inhibit several organ-specific autoimmune diseases. While most in vitro studies suggest that CD4+CD25+ Treg cells adopt a cytokine-independent but cell contact-dependent mode of T cell regulation, their precise mechanism of suppression in vivo remains largely unknown. Here we examine the functional contribution of Treg cell-derived TGF-β1 and effector T cell responsiveness to TGF-β in CD4+CD25+ T cell-mediated suppression of inflammatory bowel disease (IBD). We show that CD4+CD25+ Treg cells from either TGF-β1+/+ or neonatal TGF-β1–/– mice can suppress the incidence and severity of IBD as well as colonic IFN-γ mRNA expression induced by WT CD4+CD25– effector T cells. Furthermore, TGF-β-resistant Smad3–/– CD4+CD25+ Treg cells are equivalent to WT Treg cells in their capacity to suppress disease induced by either WT or Smad3–/– CD4+CD25– effector T cells. Finally, anti-TGF-β treatment exacerbates the colitogenic potential of CD4+CD25– effector T cells in the absence of CD4+CD25+ Treg cells. Together, these data demonstrate that in certain situations CD4+CD25+ T cells are able to suppress intestinal inflammation by a mechanism not requiring Treg cell-derived TGF-β1 or effector T cell/Treg cell responsiveness to TGF-β via Smad3.