IFN-γ was originally characterized as a proinflammatory cytokine with T helper type 1 inducing activity, but it is now clear that it also has important immunoregulatory functions. Regulatory T cells play an important role in models of autoimmunity, GVHD, and transplantation, and offer potential as a cellular therapy. In rodent models, in vivo-generated CD25(+)CD4(+) T cells can prevent allograft rejection, but therapeutic exploitation of Treg will more likely depend on protocols that allow the generation or selection of Treg ex vivo. The experiments described in this chapter will show that alloantigen-reactive Treg can be generated/expanded ex vivo using IFN-γ, a cytokine more usually associated with allograft rejection. Although IFN-γ production has hitherto been generally regarded as nonpermissive for allograft survival, we believe this paradoxical "good-bad" role for IFN-γ may reflect an important physiological negative feedback loop.