We identified a murine peptide-specific CD8 T regulatory cell population able to suppress responding CD4 T cells. Immunization with OVA, poly(I:C), and anti-4-1BB generated a population of SIINFEKL-specific CD8 T regulatory cells that profoundly inhibited peptide-responding CD4 T cells from cellular division. The mechanism of suppression required IFN-gamma, but IFN-gamma alone was not sufficient to suppress the responding CD4 T cells. The data show that CD8 T regulatory cells were unable to suppress unless they engaged IFN-gamma. Furthermore, even in the absence of recall with peptide, the CD8 T regulatory cells suppressed CD4 responses as long as IFN-gamma was present. To examine the effector mechanism of suppression, we showed that neutralizing TGF-beta inhibited suppression because inclusion of anti-TGF-beta rescued the proliferative capacity of the responding cells. TGF-beta-based suppression was dependent completely upon the CD8 T regulatory cells being capable of binding IFN-gamma. This was the case, although peptide recall of primed IFN-gamma (-/-) or IFN-gammaR(-/-) CD8 T cells up-regulated pro-TGF-beta protein as measured by surface latency-associated peptide expression but yet were unable to suppress. Finally, we asked whether the CD8 T regulatory cells were exposed to active TGF-beta in vivo and showed that only wild-type CD8 T regulatory cells expressed the TGF-beta-dependent biomarker CD103, suggesting that latency-associated peptide expression is not always congruent with elaboration of active TGF-beta. These data define a novel mechanism whereby IFN-gamma directly stimulates CD8 T regulatory cells to elaborate TGF-beta-based suppression. Ultimately, this mechanism may permit regulation of pathogenic Th1 responses by CD8 T regulatory cells.