We have shown previously that homotypic interaction of resting memory CD4 T cells with activated T cells induces the production of cytokines with immunoregulatory potential (IL-10, IL-4) from the former. Here, we analyzed the effector functions of these T cells stimulated by homotypic T cell interaction. T cells induced upon homotypic T cell interaction expressed CD25 and reduced levels of CD127 and produced TGF-β. Functionally, homotypic T cell interaction-induced T cells were anergic and inhibited the proliferation of CD25-negative T cells as potently as naturally occurring CD25-positive Tregs in vitro. They also prevented clonotypic expansion of OVA TCR tg T cells in BALB/c mice upon antigenic challenge in vivo. The generation of suppressor T cells by homotypic T cell contact is anchored and tuned through interactions of LFA-1 and its ligands ICAM-1, ICAM-2, and ICAM-3. Together, the data suggest a negative-feedback mechanism of specific immunity involving bystander-activated memory T cells.