As one of the main mediators of the endoplasmic reticulum unfolded protein response, heat shock protein gp96 is also an obligate chaperone for multiple TLRs including TLR4. We demonstrated recently that enforced cell surface expression of gp96 in a transgenic (Tg) mouse (96tm-Tg) conferred hyperresponsiveness to LPS and induced TLR4-dependent lupus-like autoimmune diseases. In this study, we investigated the function of CD4(+)CD25(+) Foxp3(+) regulatory T cells (T(reg)) in these mice in light of the important roles of T(reg) in the maintenance of peripheral tolerance against self-Ag as well as the increasing appreciation of TLR signaling on the regulation of T(reg). We found that the development of T(reg) was not impaired in 96tm-Tg mice. Contrary to the prediction of dampened T(reg) activity, we discovered that the suppressive functions of T(reg) were increased in 96tm-Tg mice. Inactivation of T(reg) during the neonatal stage of life exacerbated not only organ-specific diseases but also systemic autoimmune diseases. By crossing 96tm-Tg mice into the TLR4 null background, we demonstrated the critical roles of TLR4 in the amplification of T(reg) suppressive function. These findings illustrate that gp96 plays dual roles in regulating immune responses by augmenting proinflammatory responses and inducing T(reg) function, both of which are dependent on its ability to chaperone TLR4. Our study provides strong support to the notion of compensatory T(reg) activation by TLR ligation to dampen inflammation and autoimmune diseases.