CD4⁺ helper T (Th) cells play a crucial role in the delicate balance between host defense and autoimmune disease. Two important populations of helper T cells are the proinflammatory, interleukin-17 (IL-17)–producing (Th17) cells and the anti-inflammatory forkhead box P3–positive (FoxP3⁺) T regulatory (Treg) cells. Here we show that all-trans retinoic acid (ATRA) and other agonists of the retinoic acid receptor alpha (RARα) inhibit the formation of Th17 cells and promote FoxP3 expression. Conversely, inhibition of retinoic acid signaling constrains transforming growth factor beta (TGF-β1) induction of FoxP3. The effect of ATRA is mediated independently of IL-2, signal transducer and activator of transcription 5 (Stat5) and Stat3, representing a novel mechanism for the induction of FoxP3 in CD4 T cells. As previous studies have shown that vitamin A derivatives are protective in animal models of autoimmune disease, the current data suggest a previously unrecognized role for RARα in the regulation of CD4⁺ T-cell differentiation and provide a mechanism for the anti-inflammatory effects of retinoic acid.