Regulatory T (T reg) cells are critical for preventing autoimmunity mediated by self-reactive T cells, but their role in modulating immune responses during chronic viral infection is not well defined. To address this question and to investigate a role for T reg cells in exhaustion of virus-specific CD8 T cells, we depleted T reg cells in mice chronically infected with lymphocytic choriomeningitis virus (LCMV). T reg cell ablation resulted in 10–100-fold expansion of functional LCMV-specific CD8 T cells. Rescue of exhausted CD8 T cells was dependent on cognate antigen, B7 costimulation, and conventional CD4 T cells. Despite the striking recovery of LCMV-specific CD8 T cell responses, T reg cell depletion failed to diminish viral load. Interestingly, T reg cell ablation triggered up-regulation of the molecule programmed cell death ligand-1 (PD-L1), which upon binding PD-1 on T cells delivers inhibitory signals. Increased PD-L1 expression was observed especially on LCMV-infected cells, and combining T reg cell depletion with PD-L1 blockade resulted in a significant reduction in viral titers, which was more pronounced than that upon PD-L1 blockade alone. These results suggest that T reg cells effectively maintain CD8 T cell exhaustion, but blockade of the PD-1 inhibitory pathway is critical for elimination of infected cells.