Naturally occurring CD4⁺ regulatory T cells, the majority of which express CD25, are engaged in dominant control of self-reactive T cells, contributing to the maintenance of immunologic self-tolerance. Their depletion or functional alteration leads to the development of autoimmune disease in otherwise normal animals. The majority, if not all, of such CD25⁺CD4⁺ regulatory T cells are produced by the normal thymus as a functionally distinct and mature subpopulation of T cells. Their repertoire of antigen specificities is as broad as that of naive T cells, and they are capable of recognizing both self and nonself antigens, thus enabling them to control various immune responses. In addition to antigen recognition, signals through various accessory molecules and via cytokines control their activation, expansion, and survival, and tune their suppressive activity. Furthermore, the generation of CD25⁺CD4⁺ regulatory T cells in the immune system is at least in part developmentally and genetically controlled. Genetic defects that primarily affect their development or function can indeed be a primary cause of autoimmune and other inflammatory disorders in humans. Based on recent advances in our understanding of the cellular and molecular basis of this T cell–mediated immune regulation, this review discusses how naturally arising CD25⁺CD4⁺ regulatory T cells contribute to the maintenance of immunologic self-tolerance and negative control of various immune responses, and how they can be exploited to prevent and treat autoimmune disease, allergy, cancer, and chronic infection, or establish donor-specific transplantation tolerance.