Regulatory T cells (T_reg cells) are required for peripheral tolerance. Evidence indicates that T_reg cells can adopt specialized differentiation programs in the periphery that are controlled by transcription factors usually associated with helper T cell differentiation. Here we demonstrate that expression of the transcription factor Blimp-1 defined a population of T_reg cells that localized mainly to mucosal sites and produced IL-10. Blimp-1 was required for IL-10 production by these cells and for their tissue homeostasis. We provide evidence that the transcription factor IRF4, but not the transcription factor T-bet, was essential for Blimp-1 expression and for the differentiation of all effector T_reg cells. Thus, our study defines a differentiation pathway that leads to the acquisition of T_reg cell effector functions and requires both IRF4 and Blimp-1.