Previous results have shown that CD4⁺CD25⁺ regulatory T cells (Tregs) control autoimmunity in a spontaneous model of type 1 diabetes, the nonobese diabetic (NOD) mouse. Moreover, anti-CD3 reverses diabetes in this setting by promoting Tregs that function in a TGF-β-dependent manner. This finding contrasts with a large body of work suggesting that CD4⁺CD25^high Tregs act in a cytokine-independent manner, thus suggesting that another type of Treg is operational in this setting. We sought to determine the basis of suppression both in untreated NOD mice and in those treated with anti-CD3. Our present results show that a subset of foxP3⁺ cells present within a CD4⁺CD25^low lymphocyte subset suppresses T cell immunity in spontaneously diabetic NOD mice in a TGF-β-dependent manner, a functional property typical of “adaptive” regulatory T cells. This distinct Treg subset is evident in NOD, but not normal, mice, suggesting that the NOD mice may generate these adaptive Tregs in an attempt to regulate ongoing autoimmunity. Importantly, in two distinct in vivo models, these TGF-β-dependent adaptive CD4⁺CD25^low T cells can be induced from peripheral CD4⁺CD25⁻ T lymphocytes by anti-CD3 immunotherapy which correlates with the restoration of self-tolerance.