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Naturally occurring Foxp3+CD4+ regulatory T cells (Tregs) are essential for maintaining immunological self-tolerance and immune homeostasis. Here, we show that a specific deficiency of cytotoxic T lymphocyte antigen 4 (CTLA-4) in Tregs results in spontaneous development of systemic lymphoproliferation, fatal T cell–mediated autoimmune disease, and hyperproduction of immunoglobulin E in mice, and it also produces potent tumor immunity. Treg-specific CTLA-4 deficiency impairs in vivo and in vitro suppressive function of Tregs—in particular, Treg-mediated down-regulation of CD80 and CD86 expression on dendritic cells. Thus, natural Tregs may critically require CTLA-4 to suppress immune responses by affecting the potency of antigen-presenting cells to activate other T cells.