The immune system undergoes rapid reconstitution after autologous or syngeneic bone marrow transplantation with the re-establishment of tolerance to self-antigens. Administration of drugs such as cyclosporine that inhibit thymic-dependent clonal deletion disrupts the reconstitution of the immune system. In the absence of a peripheral regulatory T cells eliminated by the preparative regimen, systemic autoimmunity with pathology similar to graft-versus-host disease often develops. Moreover, the resolution of autoaggression is dependent on the reconstitution of CD4+ regulatory T cells. This study examined the specificity and function of this regulatory population assessed ex vivo that plays a critical role in down-regulating the autoreactive T lymphocyte response in cyclosporine-induced syngeneic graft-versus-host disease. The results suggest that both the antigen-specific regulatory and pathogenic effector T cells recognize a common peptide antigen framework (CLIP, a peptide derived from the invariant chain) presented by major histocompatibility complex class II molecules. Analysis of the CD4+ T-cell compartment revealed two subsets of CLIP-reactive T cells that differentially require the N- and C-terminal flanking domain of this peptide. Regulatory function is associated with the cells that require the C-terminal flanking domain. This population expresses the Foxp3 nuclear transcription factor and plays a critical role in re-establishing tolerance to self-major histocompatibility complex class II antigens. In addition to suppressing the production of type 1 cytokines, these regulatory T cells can direct the apoptotic death of the pathogenic autoreactive lymphocytes. This study also suggests that the development of functional regulatory activity is an active response initiated by the presence of autoreactive lymphocytes that can present the target antigen (major histocompatibility complex class II CLIP) to the regulatory T cells. Moreover, this process can be mimicked by peptide antigen in the absence of the pathogenic effector lymphocytes leading to the development of functional regulatory T-cell activity.