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T helper 2 (Th2) cells play a critical role in the pathogenesis of asthma, but the precise immunological mechanisms that inhibit Th2 cell function in vivo are not well understood. Using gene therapy, we demonstrated that ovalbumin-specific (OVA-specific) Th cells engineered to express latent TGF-β abolished airway hyperreactivity and airway inflammation induced by OVA-specific Th2 effector cells in SCID and BALB/c mice. These effects correlated with increased concentrations of active TGF-β in the bronchoalveolar lavage (BAL) fluid, demonstrating that latent TGF-β was activated in the inflammatory environment. In contrast, OVA-specific Th1 cells failed to inhibit airway hyperreactivity and inflammation in this system. The inhibitory effect of TGF-β–secreting Th cells was antigen-specific and was reversed by neutralization of TGF-β. Our results demonstrate that T cells secreting TGF-β in the respiratory mucosa can indeed regulate Th2-induced airway hyperreactivity and inflammation and suggest that TGF-β–producing T cells play an important regulatory role in asthma.