Factors influencing the development of CD4+CD25+ T-cells in vivo are poorly understood. In order to investigate the contribution of TGFbeta1 to the development and function of CD4+CD25+ T-cells, we generated a gain of function mutation resulting in the overexpression of an active form of TGFbeta1 in T-cells under control of the human CD2 promoter. In peripheral lymphoid organs and in the thymus, the frequency of CD4+CD25+ T-cells was increased in transgenic mice. This appeared to be due to an autocrine effect of TGFbeta on T-cells, since concomitant impairment of TGFbeta-signaling in double transgenic mice resulted in a phenotype similar to wild type. In contrast, in single transgenic mice with impaired TGFbeta-signaling in T-cells, CD4+CD25+ T-cell numbers were reduced in peripheral lymphoid organs but not in the thymus. In addition, TGFbeta was found to regulate the expression of Foxp3 in vivo, a transcription factor essential for the generation and function of regulatory T-cells. In CD4+CD25+ T-cells, TGFbeta1 increased the expression of Foxp3, whereas a decreased expression was seen in CD4+CD25+ T-cells with impaired TGFbeta-signaling. TGFbeta1 induced the expression of IL-10 in transgenic T-cells, but the increased in vitro suppressive capacity observed in transgenic CD4+CD25+ T-cells was due to the secretion of TGFbeta and not IL-10. Therefore, our study provides in vivo evidence for a role of TGFbeta in the homeostasis of CD4+CD25+ T-cells.