Adoptive transfer of thymus-derived natural regulatory T cells (nTregs) effectively suppresses disease in murine models of autoimmunity and graft-versus-host disease (GVHD). TGFβ induces Foxp3 expression and suppressive function in stimulated murine CD4+25- T cells, and these induced Treg (iTregs), like nTreg, suppress auto- and allo-reactivity in vivo. However, while TGFβ induces Foxp3 expression in stimulated human T cells, the expanded cells lack suppressor cell function. Here we show that Rapamycin (Rapa) enhances TGFβ-dependent Foxp3 expression and induces a potent suppressor function in naive (CD4+ 25-45RA+) T cells. Rapa/TGFβ iTregs are anergic, express CD25 at levels higher than expanded nTregs and few cells secrete IL-2, IFNγ or IL-17 even after PMA and Ionomycin stimulation in vitro. Unlike other published methods of inducing Treg function, Rapa/TGFβ induces suppressive function even in the presence of memory CD4+ T cells. A single apheresis unit of blood yields an average ∼240 × 109 (range ∼70-560 × 109) iTregs from CD4+25- T cells in ≤2 weeks of culture. Most importantly, Rapa/TGFβ iTregs suppress disease in a xenogeneic model of GVHD. This study opens the door for iTreg cellular therapy for human diseases. This study demonstrates that potent suppressive function is induced when human CD4+25- T cells are expanded in the presence of rapamycin and TGFβ, and that adoptive transfer of these induced regulatory T cells ameliorates disease in a xenogeneic model of graft versus host disease.