Immune responses to pathogens need to be maintained within appropriate levels to minimize tissue damage, whereas such controlled immunity may allow persistent infection of certain types of pathogens. Interleukin 10 (IL-10) plays an important role in such immune regulation. We previously showed that HSV-stimulated human plasmacytoid dendritic cells (pDCs) induced naive CD4+ T cells to differentiate into interferon gamma (IFN-gamma)/IL-10-producing T cells. Here we show that HSV-stimulated pDCs induce allogeneic naive CD4+ T cells to differentiate into cytotoxic regulatory T cells that poorly proliferate on restimulation and inhibit proliferation of coexisting naive CD4+ T cells. IL-3-stimulated pDCs or myeloid DCs did not induce such regulatory T cells. Both IFN-alpha and IL-10 were responsible for the induction of anergic and regulatory properties. High percentages of CD4+ T cells cocultured with HSV-stimulated pDCs, and to a lesser extent those cocultured with IL-3-stimulated pDCs, expressed granzyme B and perforin in an IL-10-dependent manner. CD4+ T cells cocultured with HSV-stimulated pDCs accordingly exhibited cytotoxic activity. The finding that virus-stimulated pDCs are capable of inducing CD4+ cytotoxic regulatory T cells suggests that this DC subset may play an important role in suppressing excessive inflammatory responses and also in inducing persistent viral infection.