Inflammation is a beneficial host response to infection but can contribute to inflammatory disease if unregulated. The Th17 lineage of T helper (Th) cells can cause severe human inflammatory diseases. These cells exhibit both instability (they can cease to express their signature cytokine, IL-17A) and plasticity (they can start expressing cytokines typical of other lineages) upon in vitro re-stimulation. However, technical limitations have prevented the transcriptional profiling of pre- and post-conversion Th17 cells ex vivo during immune responses. Thus, it is unknown whether Th17 cell plasticity merely reflects change in expression of a few cytokines, or if Th17 cells physiologically undergo global genetic reprogramming driving their conversion from one T helper cell type to another, a process known as transdifferentiation. Furthermore, although Th17 cell instability/plasticity has been associated with pathogenicity, it is unknown whether this could present a therapeutic opportunity, whereby formerly pathogenic Th17 cells could adopt an anti-inflammatory fate. Here we used two new fate-mapping mouse models to track Th17 cells during immune responses to show that CD4(+) T cells that formerly expressed IL-17A go on to acquire an anti-inflammatory phenotype. The transdifferentiation of Th17 into regulatory T cells was illustrated by a change in their signature transcriptional profile and the acquisition of potent regulatory capacity. Comparisons of the transcriptional profiles of pre- and post-conversion Th17 cells also revealed a role for canonical TGF-β signalling and consequently for the aryl hydrocarbon receptor (AhR) in conversion. Thus, Th17 cells transdifferentiate into regulatory cells, and contribute to the resolution of inflammation. Our data suggest that Th17 cell instability and plasticity is a therapeutic opportunity for inflammatory diseases.