CD4⁺Foxp3⁺ regulatory T (T_reg) cells are important for maintaining immune tolerance. Understanding the molecular mechanism that regulates T_reg differentiation will facilitate the development of effective therapeutic strategies against autoimmune diseases. We report here that the SUMO E3 ligase PIAS1 restricts the differentiation of natural T_reg cells by maintaining a repressive chromatin state of the Foxp3 promoter. PIAS1 acts by binding to the Foxp3 promoter to recruit DNA methyltransferases and heterochromatin protein 1 for epigenetic modifications. Pias1 deletion caused promoter demethylation, reduced histone H3 methylation at Lys⁹, and enhanced promoter accessibility. Consistently, Pias1^−/− mice displayed an increased natural T_reg cell population and were resistant to the development of experimental autoimmune encephalomyelitis. Our studies have identified an epigenetic mechanism that negatively regulates the differentiation of natural T_reg cells.