A better understanding of the role of CD4⁺CD25⁺ regulatory T cells in disease pathogenesis should follow from the discovery of reliable markers capable of discriminating regulatory from activated T cells. We report that the CD4⁺CD25⁺ population in synovial fluid of juvenile idiopathic arthritis (JIA) patients comprises both regulatory and effector T cells that can be distinguished by expression of CD27. CD4⁺CD25⁺CD27⁺ cells expressed high amounts of FoxP3 (43% of them being FoxP3⁺), did not produce interleukin (IL)-2, interferon-γ, or tumor necrosis factor, and suppressed T cell proliferation in vitro, being, on a per cell basis, fourfold more potent than the corresponding peripheral blood population. In contrast, CD4⁺CD25⁺CD27⁻ cells expressed low amounts of FoxP3, produced effector cytokines and did not suppress T cell proliferation. After in vitro activation and expansion, regulatory but not conventional T cells maintained high expression of CD27. IL-7 and IL-15 were found to be present in synovial fluid of JIA patients and, when added in vitro, abrogated the suppressive activity of regulatory T cells. Together, these results demonstrate that, when used in conjunction with CD25, CD27 is a useful marker to distinguish regulatory from effector T cells in inflamed tissues and suggest that at these sites IL-7 and IL-15 may interfere with regulatory T cell function.