Foxp3, a winged-helix family transcription factor, serves as the master switch for CD4+ regulatory T cells (Treg). We identified a unique and evolutionarily conserved CpG-rich island of the Foxp3 nonintronic upstream enhancer and discovered that a specific site within it was unmethylated in natural Treg (nTreg) but heavily methylated in naive CD4+ T cells, activated CD4+ T cells, and peripheral TGFβ-induced Treg in which it was bound by DNMT1, DNMT3b, MeCP2, and MBD2. Demethylation of this CpG site using the DNA methyltransferase inhibitor 5-aza-2′-deoxycytidine (Aza) induced acetylation of histone 3, interaction with TIEG1 and Sp1, and resulted in strong and stable induction of Foxp3. Conversely, IL-6 resulted in methylation of this site and repression of Foxp3 expression. Aza plus TGFβ-induced Treg resembled nTreg, expressing similar receptors, cytokines, and stable suppressive activity. Strong Foxp3 expression and suppressor activity could be induced in a variety of T cells, including human CD4+ CD25− T cells. Epigenetic regulation of Foxp3 can be predictably controlled with DNMT inhibitors to generate functional, stable, and specific Treg.