CD25+Treg cells (CD4+CD25+Foxp3+ regulatory T cells) play a central role in the maintenance of peripheral self-tolerance and immune homoeostasis. A previous study showed that CD25+Treg cells suppressed the differentiation and function of Th1 cells in vivo and in vitro. However, the mechanism of suppressing Th1 cell differentiation mediated by CD25+Treg cells remains unclear. In the present study, we found that CD25+Treg cells could reduce the production of IFN (interferon)-γ and the percentage of IFN-γ-, IL-2 and TNF-α-producing cells by CD25−T cells under Th1 cell culture conditions and suppress the differentiation of CD25−T cells into Th1 cells in a dose-dependent manner. Moreover, these CD25+Treg cells could inhibit the activation of CD25−T cells by down-regulating the expression of activation markers CD69 and CD25 and suppress the division and proliferation of CD25−T cells using CFSE (carboxyfluorescein diacetate succinimidyl ester)-labelling and BrdU (5-bromo-20-deoxyuridine) incorporation, respectively. Further studies showed that the suppressive effects of CD25+Treg cells on Th1 cell differentiation required cell—cell contact and was partially restored by the addition of anti-TGF-β mAb (monoclonal antibody) but not anti-IL-10 mAb, indicating that the suppression mechanism of CD25+Treg cells was cell—cell contact dependent and partially via TGF-β. This finding strongly indicates a therapeutic role for CD25+Treg cells in Th1-mediated diseases.