Regulatory CD4+ CD25+ T cells (Tregs) are defective numerically and functionally in autoimmune hepatitis (AIH). We have investigated and compared the mechanism of action of Tregs in healthy subjects and in AIH patients using Transwell experiments, where Tregs are cultured either in direct contact with or separated from their targets by a semipermeable membrane. We also studied Treg FOXP3 expression and effect on apoptosis. Direct contact is necessary for Tregs to suppress proliferation and IFN-γ production by CD4+ CD25− and CD8+ T cells in patients and controls. Moreover, in both, direct contact of Tregs with their targets leads to increased secretion of regulatory cytokines IL-4, IL-10, and TGF-β, suggesting a mechanism of linked immunosuppression. Tregs/CD4+ CD25− T cell cocultures lead to similar changes in IFN-γ and IL-10 secretion in patients and controls, whereas increased TGF-β secretion is significantly lower in patients. In contrast, in patients, Tregs/CD8+ T cell cocultures lead to a higher increase of IL-4 secretion. In AIH, Treg FOXP3 expression is lower than in normal subjects. Both in patients and controls, FOXP3 expression is present also in CD4+ CD25− T cells, although at a low level and not associated to suppressive function. Both in patients and controls, addition of Tregs does not influence target cell apoptosis, but in AIH, spontaneous apoptosis of CD4+ CD25− T cells is reduced. In conclusion, Tregs act through a direct contact with their targets by modifying the cytokine profile and not inducing apoptosis. Deficient CD4+ CD25− T cell spontaneous apoptosis may contribute to the development of autoimmunity.