Bcl-3 is an atypical NF-κB family member that regulates NF-κB-dependent gene expression in effector T cells, but a cell-intrinsic function in regulatory T (Treg) cells and colitis is not clear. Here we show that Bcl-3 expression levels in colonic T cells correlate with disease manifestation in patients with inflammatory bowel disease. Mice with T-cell-specific overexpression of Bcl-3 develop severe colitis that can be attributed to defective Treg cell development and function, leading to the infiltration of immune cells such as pro-inflammatory γδT cells, but not αβ T cells. In Treg cells, Bcl-3 associates directly with NF-κB p50 to inhibit DNA binding of p50/p50 and p50/p65 NF-κB dimers, thereby regulating NF-κB-mediated gene expression. This study thus reveals intrinsic functions of Bcl-3 in Treg cells, identifies Bcl-3 as a potential prognostic marker for colitis and illustrates the mechanism by which Bcl-3 regulates NF-κB activity in Tregs to prevent colitis.