Naturally occurring CD25⁺CD4⁺ regulatory T cells are engaged in the maintenance of immunological self-tolerance and down-regulation of various immune responses. Recent studies with mice showed that Foxp3, which encodes the transcription factor Scurfin, is a master regulatory gene for the development and function of CD25⁺CD4⁺ regulatory T cells. Here we examined the role of FOXP3 in human CD25⁺CD4⁺ regulatory T cells. The FOXP3 gene and its protein product were preferentially expressed in peripheral CD25⁺CD4⁺ T cells, in particular CD25⁺CD45RO⁺CD4⁺ T cells in normal individuals and, interestingly, in some human T cell leukemia virus type 1-infected T cell lines, which constitutively express CD25. TCR stimulation of CD25⁻CD45RO⁻CD4⁺ naive T cells failed to elicit FOXP3 expression at the gene or protein level. Ex vivo retroviral gene transfer of FOXP3, on the other hand, converted peripheral CD25⁻CD45RO⁻CD4⁺ naive T cells into a regulatory T cell phenotype similar to CD25⁺CD4⁺ regulatory T cells. For example, FOXP3-transduced T cells exhibited impaired proliferation and production of cytokines including IL-2 and IL-10 upon TCR stimulation, up-regulated the expression of regulatory T cell-associated molecules such as CD25 and CTL-associated antigen-4 and suppressed in vitro proliferation of other T cells in a cell–cell contact-dependent manner. Thus, human FOXP3 is a crucial regulatory gene for the development and function of CD25⁺CD4⁺ regulatory T cells, and can be used as their reliable marker. Furthermore, regulatory T cells de novo produced from normal naive T cells by FOXP3 transduction can be instrumental for treatment of autoimmune/inflammatory diseases and negative control of various immune responses.