Natural regulatory T cells (nTregs) play an important role in tolerance; however, the small numbers of cells obtainable potentially limit the feasibility of clinical adoptive transfer. Therefore, we studied the feasibility and efficacy of using murine-induced regulatory T cells (iTregs) for the induction of tolerance after bone marrow transplantation. iTregs could be induced in large numbers from conventional donor CD4 and CD8 T cells within 1 wk and were highly suppressive. During graft-versus-host disease (GVHD), CD4 and CD8 iTregs suppressed the proliferation of effector T cells and the production of proinflammatory cytokines. However, unlike nTregs, both iTreg populations lost Foxp3 expression within 3 wk in vivo, reverted to effector T cells, and exacerbated GVHD. The loss of Foxp3 in iTregs followed homeostatic and/or alloantigen-driven proliferation and was unrelated to GVHD. However, the concurrent administration of rapamycin, with or without IL-2/anti-IL-2 Ab complexes, to the transplant recipients significantly improved Foxp3 stability in CD4 iTregs (and, to a lesser extent, CD8 iTregs), such that they remained detectable 12 wk after transfer. Strikingly, CD4, but not CD8, iTregs could then suppress Teff proliferation and proinflammatory cytokine production and prevent GVHD in an equivalent fashion to nTregs. However, at high numbers and when used as GVHD prophylaxis, Tregs potently suppress graft-versus-leukemia effects and so may be most appropriate as a therapeutic modality to treat GVHD. These data demonstrate that CD4 iTregs can be produced rapidly in large, clinically relevant numbers and, when transferred in the presence of systemic rapamycin and IL-2, induce tolerance in transplant recipients.