CD4⁺CD25⁺Foxp3⁺ regulatory T (Treg) cells are generated during thymocyte development and play a crucial role in preventing the immune system from attacking the body's cells and tissues. However, how the formation of these cells is directed by T-cell receptor (TCR) recognition of self-peptide:major histocompatibility complex (MHC) ligands remains poorly understood. We show that an agonist self-peptide with which a TCR is strongly reactive can induce a combination of thymocyte deletion and CD4⁺CD25⁺Foxp3⁺ Treg cell formation in vivo. A weakly cross-reactive partial agonist self-peptide could similarly induce thymocyte deletion, but failed to induce Treg cell formation. These studies indicate that CD4⁺CD25⁺Foxp3⁺ Treg cell formation can require highly stringent recognition of an agonist self-peptide by developing thymocytes. They also refine the “avidity” model of thymocyte selection by demonstrating that the quality of the signal mediated by agonist self-peptides, rather than the overall intensity of TCR signaling, can be a critical factor in directing autoreactive thymocytes to undergo CD4⁺CD25⁺Foxp3⁺ Treg cell formation and/or deletion during their development.