We examined CD4(+)CD25(hi)FOXP3(+) cells Treg in children following liver transplantation and determined the relationship between Treg cell levels in the blood and in the graft. Peripheral blood was obtained from pediatric liver transplant patients at sequential time points: pre-transplant, one month, 3-4 months, 6-7 months, and 11-12 months post-transplant. PBMC were isolated, labeled for CD4, CD25 and FOXP3 expression and analyzed by flow cytometry for CD4(+)CD25(hi)FOXP3(+) cells. Sorted CD4(+)CD25(hi) cells were assessed for functional activity. Pretransplant blood levels of CD4(+)CD25(hi)FOXP3(+) Treg cells were not significantly different from post-transplant blood levels of CD4(+)CD25(hi)FOXP3(+) Treg cells. However, the blood levels of CD4(+)CD25(hi)FOXP3(+) Treg cells were significantly decreased during acute rejection compared with levels when graft function was stable. Immunohistochemistry revealed that FOXP3(+) cells were increased in the portal region of livers with histopathologic evidence of acute graft rejection compared with livers without evidence of rejection and were localized primarily within the inflammatory infiltrate. These data indicate that Treg cells are found at the site of allograft rejection and may play a role in regulation of alloreactivity. Moreover, monitoring peripheral CD4(+)CD25(hi)FOXP3(+) Treg cell levels may be useful in improving the post-transplant management of pediatric liver allograft recipients.