The thymic production of regulatory T cells (T_reg cells) requires interleukin 2 (IL-2) and agonist T cell antigen receptor (TCR) ligands and is controlled by competition for a limited developmental niche, but the thymic sources of IL-2 and the factors that limit access to the niche are poorly understood. Here we found that IL-2 produced by antigen-bearing dendritic cells (DCs) had a key role in T_reg cell development and that existing T_reg cells limited new development of T_reg cells by competing for IL-2. Our data suggest that antigen-presenting cells (APCs) that can provide both IL-2 and a TCR ligand constitute the thymic niche and that competition by existing T_reg cells for a limited supply of IL-2 provides negative feedback for new production of T_reg cells.