Therapies based on CD4(+)CD25(+)FOXP3(+) T regulatory (Treg) cells offer promise for the restoration of tolerance in many immune-mediated disorders. However, it has been proven difficult to obtain large numbers of Treg cells with potent and stable suppressive ability from adult human peripheral blood because of the lack of specific markers for Treg isolation/characterization, compromised function of isolated CD4(+)CD25(+/+) T cell populations, and the difficulty to convert conventional T cells, for example, by TGF-beta, into Treg cells in a consistent manner. In this study, we show that 1) in the presence of TGF-beta, all-trans-retinoic acid (ATRA) efficiently converts adult human peripheral blood naive CD4(+) T cells into FOXP3(+) Treg cells with stable and potent suppressive ability; 2) memory CD4(+) T cells are resistant to FOXP3 induction and, moreover, inhibit Treg conversion of naive T cells that can be partially reversed by anti-IL-4; and 3) treatment of isolated CD4(+)CD25(+/+) T cells with ATRA/TGF-beta enhances their suppressive potential during expansion. Our results indicate that ATRA/TGF-beta can be used to generate highly suppressive CD4(+)FOXP3(+) Treg cells from adult human peripheral blood and are relevant for the development for Treg-based therapies.