Regulatory T (T_reg) cells play a key role in the maintenance of the immune system homeostasis. T_reg cells can be generated in the periphery under control of TGF‐β, a cytokine involved in the negative control of the immune system. However, TGF‐β cooperates with IL‐6 in the generation of Th17 cells, a novel class of effector cells involved in numerous inflammatory diseases, including colitis. Therefore, TGF‐β emerges as a mediator of both anti‐inflammatory and pro‐inflammatory processes, depending on the local cytokine milieu. Here we demonstrate that IL‐21, a type‐1 cytokine produced by T cells and involved in the pathogenesis of immune‐mediated diseases, prevents the TGF‐β‐dependent expression of FoxP3, the master regulator of T_reg cell commitment, and the induction of suppressive capacity in naive CD4⁺ T cells, while promoting the differentiation of Th17 cells. In vivo, CD4⁺ naive T cells activated in the presence of TGF‐β and IL‐21 failed to suppress colitis while inducing an inflammatory response characterized by high levels of IL‐17 and RORγt, the transcription factor expressed by Th17 cells. Therefore, IL‐21 emerges as a key modulator of TGF‐β signaling, leading to the reciprocal differentiation of T_reg and Th17 cells.