Immune regulatory CD4(+)CD25(+) cells play a vital role in the induction and maintenance of self-tolerance and the prevention of autoimmunity. Recently, CD4(+)CD25(+) cells have been shown to be required for the ex vivo induction of tolerance to alloantigen via costimulatory blockade and to inhibit allogeneic skin graft rejection. Data presented here demonstrate that CD4(+)CD25(+) cells play an important role in graft-versus-host disease (GVHD) generation. Depletion of CD4(+)CD25(+) cells from the donor T-cell inoculum or in vivo CD25-depletion of the recipient before transplantation resulted in increased GVHD mediated by CD4(+) or whole T cells in several strain combinations irrespective of the total body irradiation conditioning regime. The infusion of freshly purified donor CD4(+)CD25(+) cells modestly inhibited GVHD when administered in equal numbers with whole CD4(+) cells. Because CD4(+)CD25(+) cells only account for 5% to 10% of the total CD4(+) population, the administration of high numbers of fresh donor CD4(+)CD25(+) cells may not be clinically practical. However, we found that large numbers of CD4(+)CD25(+) cells can be obtained by ex vivo activation and expansion. Cultured CD4(+)CD25(+) cells, administered in equal numbers with CD4(+) T cells or CD25-depleted whole T cells, resulted in significant inhibition of rapidly lethal GVHD. To our knowledge, this study is the first to demonstrate that activated, cultured CD4(+)CD25(+) cells can offer substantial protection in a relevant in vivo animal model of disease. These data have important ramifications for clinical bone marrow and solid organ transplantation. CD4(+)CD25(+) cells warrant consideration as an exciting new modality of cellular therapy for the inhibition of undesirable autologous and allogeneic responses.