IL-2−/− mice develop autoimmunity despite having relatively normal numbers of regulatory T cells (Tregs). In contrast, we demonstrate that IL-2−/−× IL-15−/− and IL-2Rβ−/− mice have a significant decrease in Treg numbers. Ectopic expression of foxp3 in a subset of CD4+ T cells rescued Treg development and prevented autoimmunity in IL-2Rβ−/− mice, suggesting that IL-2Rβ-dependent signals regulate foxp3 expression in Tregs. Subsequent analysis of IL-2Rβ-dependent signal transduction pathways established that the transcription factor STAT5 is necessary and sufficient for Treg development. Specifically, T cell-specific deletion of STAT5 prevented Treg development; conversely, reconstitution of IL-2Rβ−/− mice with bone marrow cells expressing an IL-2Rβ mutant that exclusively activates STAT5 restored Treg development. Finally, STAT5 binds to the promoter of the foxp3 gene suggesting that IL-2Rβ-dependent STAT5 activation promotes Treg differentiation by regulating expression of foxp3.