Normal levels of CD4(+) regulatory T cells are critical for the maintenance of immunological homeostasis and the prevention of autoimmune diseases. However, we now show that the expansion of CD4(+) regulatory T cells in response to a chronic viral infection can lead to immunosuppression. Mice persistently infected with Friend retrovirus develop approximately twice the normal percentage of splenic CD4(+) regulatory T cells and lose their ability to reject certain tumor transplants. The role of CD4(+) regulatory T cells was demonstrated by the transmission of immunosuppression to uninfected mice by adoptive transfers of CD4(+) T cells. CD4(+) T cells from chronically infected mice were also immunosuppressive in vitro, inhibiting the generation of cytolytic T lymphocytes in mixed lymphocyte cultures. Inhibition occurred at the level of blast-cell formation through a mechanism or mechanisms involving transforming growth factor-beta and the cell surface molecule CTLA-4 (CD152). These results suggest a possible explanation for HIV- and human T cell leukemia virus-I-induced immunosuppression in the absence of T cell depletion.