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Naturally occurring CD25(+)CD4(+) regulatory T cells are engaged in the maintenance of immunological self-tolerance and down-regulation of various immune responses. Recent studies with mice showed that Foxp3, which encodes the transcription factor Scurfin, is a master regulatory gene for the development and function of CD25(+)CD4(+) regulatory T cells. Here we examined the role of FOXP3 in human CD25(+)CD4(+) regulatory T cells. The FOXP3 gene and its protein product were preferentially expressed in peripheral CD25(+)CD4(+) T cells, in particular CD25(+)CD45RO(+)CD4(+) T cells in normal individuals and, interestingly, in some human T cell leukemia virus type 1-infected T cell lines, which constitutively express CD25. TCR stimulation of CD25(-)CD45RO(-)CD4(+) naive T cells failed to elicit FOXP3 expression at the gene or protein level. Ex vivo retroviral gene transfer of FOXP3, on the other hand, converted peripheral CD25(-)CD45RO(-)CD4(+) naive T cells into a regulatory T cell phenotype similar to CD25(+)CD4(+) regulatory T cells. For example, FOXP3-transduced T cells exhibited impaired proliferation and production of cytokines including IL-2 and IL-10 upon TCR stimulation, up-regulated the expression of regulatory T cell-associated molecules such as CD25 and CTL-associated antigen-4 and suppressed in vitro proliferation of other T cells in a cell-cell contact-dependent manner. Thus, human FOXP3 is a crucial regulatory gene for the development and function of CD25(+)CD4(+) regulatory T cells, and can be used as their reliable marker. Furthermore, regulatory T cells de novo produced from normal naive T cells by FOXP3 transduction can be instrumental for treatment of autoimmune/inflammatory diseases and negative control of various immune responses.