In naïve T cells transforming growth factor-beta (TGF-β) induces Foxp3, a transcription factor essential for programming and developing T regulatory cells (Treg cells). This finding reveals a physiological factor which can turn on the Foxp3 gene and establishes an experimental approach to induce antigen-specific Treg cells as a potential therapy for human diseases. While this role for TGF-β is well confirmed, several critical questions remain largely unanswered and await further investigation. In this regard, it is imperative to understand the molecular pathways by which TGF-β signaling initiates and regulates Foxp3 expression. It is also important to elucidate which factors and/or cytokines influence the TGF-β-mediated conversion of naïve T cells and how to create an immunologically regulatory milieu to facilitate Treg cell generation in vivo. In this short article, we will highlight the key findings and recent progress in the field, discuss the molecular mechanisms underlying the TGF-β-mediated induction of Foxp3, and attempt to outline the challenges ahead.