Immunosuppressive, naturally occurring CD4⁺CD25⁺forkhead box p3⁺ (Foxp3⁺) regulatory T cells (nT_regs) offer potential for the treatment of immune-mediated inflammatory disorders. However, potential instability of ex vivo-expanded nT_regs following their adoptive transfer may be a significant limitation. LPS-stimulated hepatic stellate cells (HSCs) induce expansion and enhance the suppressive function and stability of allogeneic nT_regs. We aimed to delineate mechanisms underlying HSC-induced expansion and increased potency of nT_regs. HSCs and nT_regs were isolated from mouse livers and spleens, respectively. Following coculture with LPS-pretreated allogeneic HSCs (LPS/HSCs), proliferation of nT_regs was measured by CFSE dilution, and Foxp3 expression and acetylation were determined by immunoprecipitation (IP) and Western blotting analysis. Expression of various genes associated with immunologic tolerance was determined by quantitative RT-PCR (qRT-PCR). LPS stimulation increased the expression and activity of the immunoregulatory enzyme IDO1 in HSCs, and LPS/HSCs stimulated aryl hydrocarbon receptor (AhR) signaling in cocultured nT_regs. Reciprocally, T_regs increased IDO1 expression in HSCs. IDO1^−/− LPS/HSCs were inferior to WT LPS/HSCs in stimulating nT_reg expansion. Pharmacologic inhibition of IDO1 in HSCs by 1-methyltryptophan (1MT) inhibited LPS/HSC-induced AhR signaling in nT_regs, which was responsible for their expansion, Foxp3 expression, and stabilization of Foxp3 by increasing acetylation of lysine residues. Finally, HSCs cryopreserved, following 2–3 passages, were as potent as primary-cultured HSCs in expanding nT_regs. In conclusion, LPS/HSCs expand allogeneic nT_regs through an IDO-dependent, AhR-mediated mechanism and increase their stability through lysine-acetylation of Foxp3. nT_regs expanded by cryopreserved HSCs may have potential for clinical use.