Naturally occurring CD4+ CD25+ regulatory T cells (T reg) are pivotal in suppressing immune responses and maintaining tolerance. The identification of molecules controlling T reg differentiation and function is important in understanding host immune responses in malignancy and autoimmunity. In this study we show that PGE 2 enhances the in vitro inhibitory function of human purified CD4+ CD25+ T reg cells. Moreover, PGE 2 induces a regulatory phenotype in CD4+ CD25− T cells. PGE 2-treated T cell-mediated inhibition of anti-CD3-stimulated lymphocyte proliferation did not require cell contact. Phenotypic analysis revealed that PGE 2 diminished CD25 expression in both CD4+ CD25 dim T cells and CD4+ CD25 bright T reg cells. PGE 2 exposure induced the T reg cell-specific transcription factor forkhead/winged helix transcription factor gene (FOXP3) in CD4+ CD25− T cells and significantly up-regulated its expression in CD4+ CD25+ T reg cells. Similarly, 24-h incubation with supernatants from cyclooxygenase-2-overexpressing lung cancer cells that secrete high levels of PGE 2 significantly induced FOXP3 in CD4+ CD25− T cells. Finally, PGE 2 up-regulated FOXP3 at both mRNA and protein levels and enhanced FOXP3 promoter activity. This is the first report indicating that PGE 2 can modulate FOXP3 expression and T reg function in human lymphocytes.