Transgenic NOD.H-2h4 mice expressing TGF-beta under control of the thyroglobulin promoter were generated to assess the role of TGF-beta in the development of thyrocyte hyperplasia. In contrast to nontransgenic littermates, which develop lymphocytic spontaneous autoimmune thyroiditis (L-SAT), all TGF-beta transgenic (Tg) mice given NaI water for 2-7 mo developed thyroid lesions characterized by severe thyroid epithelial cell hyperplasia and proliferation, with fibrosis and less lymphocyte infiltration than in nontransgenic mice. Most Tg mice produced less anti-mouse thyroglobulin autoantibody than did wild type (WT) mice. T cells from Tg and WT mice were equivalent in their ability to induce L-SAT after transfer to SCID or TCRalpha(-/-) mice. WT lymphocytes could transfer experimental autoimmune thyroiditis or L-SAT to Tg mice, indicating that the transgenic environment did not prevent migration of lymphocytes to the thyroid. Thyroids of Tg mice had higher frequencies of Foxp3(+) regulatory T cells (Tregs) compared with nontransgenic WT mice. Transient depletion of Tregs by anti-CD25 resulted in increased infiltration of inflammatory cells into thyroids of transgenic mice. Treg depletion also resulted in increased anti-mouse thyroglobulin autoantibody responses and increased expression of IFN-gamma and IFN-gamma-inducible chemokines in thyroids of Tg mice. The results suggest that spontaneous autoimmune thyroiditis is inhibited in mice expressing transgenic TGF-beta on thyrocytes, at least in part, because there is an increased frequency of Tregs in their thyroids.