Scurfy mice, which are deficient in a functional Foxp3, exhibit a severe lymphoproliferative disorder and display generalized over-production of cytokines. Here, we show that, among the Foxp transcriptional factor family, which includes Foxp1, Foxp2, and Foxp3, only Foxp3 has the ability to inhibit IL-2, IL-4, and IFN-γ production by primary T helper cells. We found that Foxp3 physically associates with the Rel family transcription factors, nuclear factor of activated T cells (NFAT) and NF-κB, and blocks their ability to induce the endogenous expression of their target genes, including key cytokine genes. More importantly, T cells derived from scurfy mice have a dramatic increase in nuclear factor of activated T cells (NFAT) and NF-κB transcriptional activity compared with the T cells derived from WT mice. Furthermore, complementation of Foxp3 in scurfy-derived T cells lowers the NFAT and NF-κB transcriptional activity to the physiological level. Finally, we show that myelin proteolipid protein-specific autoreactive T cells transduced with Foxp3 cannot mediate experimental autoimmune encephalomyelitis, providing further support that Foxp3 suppresses the effector function of autoreactive T cells. Foxp3 has already been associated with the generation of CD4⁺CD25⁺ regulatory T cells; our data additionally demonstrate that Foxp3 suppresses the effector functions of T helper cells by directly inhibiting the activity of two key transcription factors, NFAT and NF-κB, which are essential for cytokine gene expression and T cell functions.