Dendritic cells (DCs) are specialized antigen-presenting cells that monitor the antigenic environment and activate naive T cells. The role of DCs is not only to sense danger but also to tolerize the immune system to antigens encountered in the absence of maturation/inflammatory stimuli. Indeed, if a naive T cell encounters its antigen on immature DCs (iDCs), it may differentiate into a T-regulatory (Tr) rather than a T-effector cell. However, little is known about the mechanisms by which iDCs differentiate Tr cells. We developed a standardized and highly reproducible protocol to differentiate Tr cells by repetitive exposure of naive peripheral blood CD4(+) T cells to allogeneic iDCs. The resultant Tr cells are phenotypically and functionally identical to type 1 Tr (Tr1) cells because their generation requires production of IL-10 by iDCs, and they suppress T-cell responses through an interleukin-10 (IL-10)- and a transforming growth factor beta (TGF-beta)-dependent mechanism. In addition, Tr1 cells induced by iDCs do not require the presence of CD4(+)CD25(+) Tr cells for their generation, nor do they express high constitutive levels of CD25 or the transcription factor FoxP3. Thus, iDCs can drive the differentiation of Tr1 cells and can be used to generate large numbers of alloantigen-specific Tr1 cells for clinical use as a cellular therapy to restore peripheral tolerance.