Protein kinase B (PKB)/Akt signals control T cell proliferation and differentiation but their effect on the generation and function of regulatory T cells (Treg) and Th17 cells is not well understood. In this study, we show that elevated PKB signals antagonize the immunosuppressive effect of TGF-β1 on cell size, CD25 and CD98 expression, and proliferation of CD3-stimulated naive CD4+ T cells from wild-type and CD28-deficient mice. Conventional CD4+ T cells expressing active PKB are less susceptible to suppression by natural regulatory T cells. Although PKB signals do not affect the development of natural regulatory T cells, they enhance their suppressor capacity. Upon TCR triggering and TGF-β1 costimulation, wild-type and CD28-deficient CD4+ T cells transgenic for PKB readily express Foxp3, thereby acquiring suppressor capacity. These effects of elevated PKB signals on T cell function involve a marked and sustained activation of STAT5 and Foxp3 and reduction in nuclear NFATc1 levels. In contrast, PKB signals impair TGF-β1/IL-6-mediated differentiation of naive CD4+ T cells into the Th17 lineage. This correlates with an increased signaling of ERK, STAT5, and STAT6. Finally, elevated PKB signals reduced the severity of experimental autoimmune encephalomyelitis in wild-type mice but induced experimental autoimmune encephalomyelitis in mice deficient for CD28. Altogether, these data indicate an important role of PKB signals on control of TGF-β1-mediated T cell responses and, thereby, on tolerizing and inflammatory immune processes.