Emerging data suggest that regulatory T cell (Treg) dysfunction and consequent breakdown of immunological self-tolerance in autoimmunity can be mediated by factors that are not Treg-intrinsic (e.g., cytokines). Indeed, recent studies show that in rheumatoid arthritis the proinflammatory cytokine TNF reduces the suppressive function of Tregs, whereas in vivo TNF blockade restores this function and accordingly self-tolerance. However, until now a coherent mechanism by which TNF regulates the Treg has not been described. In this paper, we show that TNF induces preferential and significant activation of the canonical NF-kappaB pathway in human Tregs as compared with CD25(-) conventional T cells. Furthermore, TNF induced primarily in CD45RA(-) Tregs a transcription program highly enriched for typical NF-kappaB target genes, such as the cytokines lymphotoxin-alpha and TNF, the TNFR superfamily members FAS, 4-1BB, and OX-40, various antiapoptotic genes, and other important immune-response genes. FACS analysis revealed that TNF also induced upregulation of cell surface expression of 4-1BB and OX40 specifically in CD45RA(-)FOXP3(+) Tregs. In contrast, TNF had only a minimal effect on the Treg's core transcriptional signature or on the intracellular levels of the FOXP3 protein in Tregs. Importantly, TNF treatment modulated the capacity of Tregs to suppress the proliferation and IFN-gamma secretion by conventional T cells, an effect that was fully reversed by cotreatment with anti-TNFR2 mAbs. Our findings thus provide new mechanistic insight into the role of TNF and TNFR2 in the pathogenesis of autoimmunity.