Regulatory T cells (Tregs) play a critical role in down-regulating immune responses to self antigens. Here we assess the significance of Sts-1 and Sts-2, two protein phosphatases that negatively regulate TCR signaling, in the development and maintenance of Tregs. We show that the number of splenic Tregs in vivo is elevated in the absence of Sts-1and Sts-2. We also found that Sts-1 and Sts-2 play a redundant role in TGF--mediated induction of Tregs in vitro. These data indicate that the Sts proteins are crucial for the maintenance of normal Treg populations in mice and also in TGF--mediated induction of Tregs in vitro.