The CD4⁺ CD25⁺ regulatory T cells play a critical role in controlling autoimmunity, but little is known about their development and maintenance. In this study, we investigated whether CD4⁺ CD25⁻ cells can convert to CD4⁺ CD25⁺ regulatory T cells in vivo under natural conditions. CD4⁺ CD25⁻ cells from CD45.1⁺ mice were sorted and transferred into congenic CD45.2⁺ mice. Converted CD4⁺ CD25⁺ cells could be detected in lymphoid organs as early as 1 wk after transfer and by 6 wk after transfer, 5–12% of transferred CD4⁺ cells expressed CD25. Converted CD4⁺ CD25⁺ cells themselves failed to proliferate after stimulation, but could suppress proliferation of responder cells in vitro, and also expressed high levels of Foxp3 mRNA. In addition, CD4⁺ CD25⁻ cells transferred into thymectomized congenic mice converted to CD4⁺ CD25⁺ cells that also suppressed responder cell proliferation in vitro, and expressed high levels of Foxp3 mRNA. Finally, CD4⁺ CD25⁻ cells transferred into B7^−/− mice failed to convert into CD4⁺ CD25⁺ cells that exhibit the regulatory phenotype. These data indicate that CD4⁺ CD25⁻ cells convert into CD4⁺ CD25⁺ regulatory T cells spontaneously in vivo and suggest that this conversion process could contribute significantly to the maintenance of the peripheral CD4⁺ CD25⁺ regulatory T cell population.