In the absence of the recently identified putative transcription factor scurfin, mice develop a lymphoproliferative disorder resulting in death by 3 wk of age from a pathology that resembles TGF-β or CTLA-4 knockout mice. In this report, we characterize mice that overexpress the scurfin protein and demonstrate that these animals have a dramatically depressed immune system. Mice transgenic for the Foxp3 gene (which encodes the scurfin protein) have fewer T cells than their littermate controls, and those T cells that remain have poor proliferative and cytolytic responses and make little IL-2 after stimulation through the TCR. Although thymic development appears normal in these mice, peripheral lymphoid organs, particularly lymph nodes, are relatively acellular. In a separate transgenic line, forced expression of the gene specifically in the thymus can alter thymic development; however, this does not appear to affect peripheral T cells and is unable to prevent disease in mice lacking a functional Foxp3 gene, indicating that the scurfin protein acts on peripheral T cells. The data indicate a critical role for the Foxp3 gene product in the function of the immune system, with both the number and functionality of peripheral T cells under the aegis of the scurfin protein.