The forkhead-family transcription factor FoxP3 is important for the development and function of CD4+CD25+ regulatory T cells. While the overall phenotypic effects of FoxP3 expression are evident, the mechanism by which FoxP3 regulates T cell activation is not well understood. CD4+ T cells from mice that express a FoxP3 Tg are refractory to TCR-mediated stimulation, failing to proliferate or produce cytokines, but possess suppressive activity towards normal T cells. In this report we show that these T cells express elevated levels of mRNA for pro-apoptotic genes and undergo rapid apoptosis following stimulation. These T cells also display slower cell cycle transit following activation, suggesting that FoxP3 is capable of regulating the ability of T cells to respond to TCR-mediated activation. Lastly, we show that contrary to expected results, under Th1 or Th2 driving conditions, CD4+ T cells from FoxP3 Tg mice differentiate into effector cells. Concomitant with differentiation is a loss of FoxP3 mRNA and protein. These data demonstrate that FoxP3 levels regulate T cell function, and that FoxP3 itself is dynamically regulated during effector T cell differentiation.