Although CD8+ Treg-mediated suppression has been described, CD8+ Treg remain poorly characterized. Here we identify a novel subset of CD8+ Treg that express latency-associated peptide (LAP) on their cell surface (CD8+LAP+ cells) and exhibit regulatory activity in vitro and in vivo. Only a small fraction of CD8+LAP+ cells express Foxp3 or CD25, although the expression levels of Foxp3 for these cells are higher than their LAP− counterparts. In addition to TGF-β, CD8+LAP+ cells produce IFN-γ, and these cells suppress EAE that is dependent on both TGF-β and IFN-γ. In an adoptive co-transfer model, CD8+LAP+ cells suppress myelin oligodendrocyte glycoprotein (MOG)-specific immune responses by inducing or expanding Foxp3+ cells and by inhibiting proliferation and IFN-γ production in vivo. Furthermore, in vivo neutralization of IFN-γ and studies with IFN-γ-deficient mice demonstrate an important role for IFN-γ production in the function of CD8+LAP+ cells. Our findings identify the underlying mechanisms that account for the immunoregulatory activity of CD8+ T cells and suggest that induction or amplification of CD8+LAP+ cells may be a therapeutic strategy to help control autoimmune processes.