Interplay between Foxp3+ regulatory T cells (Treg) and dendritic cells (DCs) maintains immunologic tolerance, but the effects of each cell on the other are not well understood. We report that polyclonal CD4+Foxp3+ Treg cells induced ex vivo with transforming growth factor beta (TGFβ) (iTreg) suppress a lupus-like chronic graft-versus-host disease by preventing the expansion of immunogenic DCs and inducing protective DCs that generate additional recipient CD4+Foxp3+ cells. The protective effects of the transferred iTreg cells required both interleukin (IL)-10 and TGFβ, but the tolerogenic effects of the iTreg on DCs, and the immunosuppressive effects of these DCs were exclusively TGFβ-dependent. The iTreg were unable to tolerize Tgfbr2-deficient DCs. These results support the essential role of DCs in ‘infectious tolerance’ and emphasize the central role of TGFβ in protective iTreg/DC interactions in vivo.