The molecular mechanism of the extrathymic generation of adaptive, or inducible, CD4(+)Foxp3(+) regulatory T cells (iTregs) remains incompletely defined. We show that exposure of splenic CD4(+)CD25(+)Foxp3(-) cells to IL-2, but not other common γ-chain cytokines, resulted in Stat5 phosphorylation and induced Foxp3 expression in ∼10% of the cells. Thus, IL-2/Stat5 signaling may be critical for Foxp3 induction in peripheral CD4(+)CD25(+)Foxp3(-) iTreg precursors. In this study, to further define the role of IL-2 in the formation of iTreg precursors as well as their subsequent Foxp3 expression, we designed a two-step iTreg differentiation model. During the initial "conditioning" step, CD4(+)CD25(-)Foxp3(-) naive T cells were activated by TCR stimulation. Inhibition of IL-2 signaling via Jak3-Stat5 was required during this step to generate CD4(+)CD25(+)Foxp3(-) cells containing iTreg precursors. During the subsequent Foxp3-induction step driven by cytokines, IL-2 was the most potent cytokine to induce Foxp3 expression in these iTreg precursors. This two-step method generated a large number of iTregs with relatively stable expression of Foxp3, which were able to prevent CD4(+)CD45RB(high) cell-mediated colitis in Rag1(-/-) mice. In consideration of this information, whereas initial inhibition of IL-2 signaling upon T cell priming generates iTreg precursors, subsequent activation of IL-2 signaling in these precursors induces the expression of Foxp3. These findings advance the understanding of iTreg differentiation and may facilitate the therapeutic use of iTregs in immune disorders.