T cell activation is tightly regulated to avoid autoimmunity. Gene related to anergy in lymphocytes (GRAIL, encoded by Rnf128) is an E3 ubiquitin ligase associated with T cell tolerance. Here, we generated and analyzed GRAIL-deficient mice and found they were resistant to immune tolerance induction and exhibited greater susceptibility to autoimmune diseases than wild-type mice. GRAIL-deficient naive T cells, after activation, exhibited increased proliferation and cytokine expression than controls and did not depend on costimulation for effector generation. Moreover, GRAIL-deficient regulatory T (Treg) cells displayed reduced suppressive function, associated with increased Th17 cell-related gene expression. GRAIL-deficient naive and Treg cells were less efficient in downregulating T cell receptor (TCR)-CD3 expression after activation and exhibited increased NFATc1 transcription factor expression; GRAIL expression promoted CD3 ubiquitinylation. Our results indicate that GRAIL, by mediating TCR-CD3 degradation, regulates naive T cell tolerance induction and Treg cell function.