The adoptive transfer of regulatory T cells (Tregs) offers a promising strategy to combat pathologies that are characterized by aberrant immune activation, including graft rejection and autoinflammatory diseases. Expression of a chimeric antigen receptor (CAR) gene in Tregs redirects them to the site of autoimmune activity, thereby increasing their suppressive efficiency while avoiding systemic immunosuppression. Since carcinoembryonic antigen (CEA) has been shown to be overexpressed in both human colitis and colorectal cancer, we treated CEA-transgenic mice that were induced to develop colitis with CEA-specific CAR Tregs. Two disease models were employed: T-cell-transfer colitis as well as the azoxymethane–dextran sodium sulfate model for colitis-associated colorectal cancer. Systemically administered CEA-specific (but not control) CAR Tregs accumulated in the colons of diseased mice. In both model systems, CEA-specific CAR Tregs suppressed the severity of colitis compared to control Tregs. Moreover, in the azoxymethane–dextran sodium sulfate model, CEA-specific CAR Tregs significantly decreased the subsequent colorectal tumor burden. Our data demonstrate that CEA-specific CAR Tregs exhibit a promising potential in ameliorating ulcerative colitis and in hindering colorectal cancer development. Collectively, this study provides a proof of concept for the therapeutic potential of CAR Tregs in colitis patients as well as in other autoimmune inflammatory disorders.