Regulatory T cells play a major role in modulating the immune response. However, most information on these cells centers on autoimmunity, and there is also considerable controversy on the functional characteristics of these cells. Here we provide direct in vitro and in vivo evidence that CD4+ CD25+ regulatory T cells inhibit the differentiation and functions of both Th1 and Th2 cells. Importantly, CD4+ CD25+ T cells suppressed the disease development of Leishmania major infection in SCID mice reconstituted with naive CD4+ CD25− T cells. Furthermore, CD4+ CD25+ T cells inhibited the development of colitis induced by both Th1 and Th2 cells in SCID mice. Our results therefore document that CD4+ CD25+ regulatory T cells suppress both Th1 and Th2 cells and that these regulatory T cells have a profound therapeutic potential against diseases induced by both Th1 and Th2 cells in vivo.