Regulatory T cells (Tregs) play an important role in the maintenance of peripheral tolerance. Several molecules including TGF-beta have been linked to the function and differentiation of Tregs. In this study, we describe a unique population of T cells expressing a membrane bound form of TGF-beta, the latency-associated peptide (LAP), and having regulatory properties in human peripheral blood. These CD4(+)LAP(+) T cells lack Foxp3 but express TGF-betaR type II and the activation marker CD69. CD4(+)LAP(+) T cells are hypoproliferative compared with CD4(+)LAP(-) T cells, secrete IL-8, IL-9, IL-10, IFN-gamma, and TGF-beta upon activation, and exhibit TGF-beta- and IL-10-dependent suppressive activity in vitro. The in vitro activation of CD4(+)LAP(-) T cells results in the generation of LAP(+) Tregs, which is further amplified by IL-8. In conclusion, we have characterized a novel population of human LAP(+) Tregs that is different from classic CD4(+)Foxp3(+)CD25(high) natural Tregs.