The mechanisms underlying the extrathymic generation of CD25+CD4 regulatory T cells (Tregs) are largely unknown. In this study the IL-4R alpha-chain-binding cytokines, IL-4 and IL-13, were identified as inducers of CD25+ Tregs from peripheral CD25-CD4 naive T cells. IL-4-induced CD25+ Tregs phenotypically and functionally resemble naturally occurring Tregs in that they are anergic to mitogenic stimulation, inhibit the proliferation of autologous responder T cells, express high levels of the Forkhead box P3 and the surface receptors glucocorticoid-induced TNFR family-related protein and CTLA-4, and inhibit effector T cells in a contact-dependent, but cytokine-independent, manner. The IL-4-induced generation of peripheral Tregs was independent of the presence of TGF-beta or IL-10, but was dependent on Ag-specific stimulation and B7 costimulation. The significance of the IL-4Ralpha-binding cytokines in the generation of Ag-specific Tregs was emphasized in a mouse model of oral tolerance, in which neutralization of IL-4 and IL-13 in mice transgenic for the TCR specific for OVA completely inhibited the expansion of OVA-specific Tregs that can be induced in untreated mice by feeding the nominal Ag. Together, our results demonstrate that IL-4 and IL-13 play an important role in generating Forkhead box P3-expressing CD25+ Tregs extrathymically in an Ag-dependent manner and therefore provide an intriguing link between the well-established immunoregulatory capacity of Th2 cells and the powerful CD25+ Treg population. Moreover, our findings might provide the basis for the design of novel therapeutic approaches for targeted immunotherapy with Tregs to known Ags in autoimmune diseases or graft-vs-host reactions.