Human regulatory macrophages (Mreg) have shown early clinical promise as a cell-based adjunct immunosuppressive therapy in solid organ transplantation. It is hypothesised that recipient CD4+ T cell responses are actively regulated through direct allorecognition of donor-derived Mregs. Here we show that human Mregs convert allogeneic CD4+ T cells to IL-10-producing, TIGIT+ FoxP3+-induced regulatory T cells that non-specifically suppress bystander T cells and inhibit dendritic cell maturation. Differentiation of Mreg-induced Tregs relies on multiple non-redundant mechanisms that are not exclusive to interaction of Mregs and T cells, including signals mediated by indoleamine 2,3-dioxygenase, TGF-β, retinoic acid, Notch and progestagen-associated endometrial protein. Preoperative administration of donor-derived Mregs to living-donor kidney transplant recipients results in an acute increase in circulating TIGIT+ Tregs. These results suggest a feed-forward mechanism by which Mreg treatment promotes allograft acceptance through rapid induction of direct-pathway Tregs.