Previous studies suggest that thymus produces a homogenous population of natural regulatory T (Treg) cells that express a transcriptional factor FOXP3 and control autoimmunity through a cell-contact-dependent mechanism. We found two subsets of FOXP3+ natural Treg cells defined by the expression of the costimulatory molecule ICOS in the human thymus and periphery. Whereas the ICOS+FOXP3+ Treg cells used interleukin-10 to suppress dendritic cell function and transforming growth factor (TGF)-beta to suppress T cell function, the ICOS-FOXP3+ Treg cells used TGF-beta only. The survival and proliferation of the two subsets of Treg cells were differentially regulated by signaling through ICOS or CD28, respectively. We suggest that the selection of natural Treg cells in thymus is coupled with Treg cell differentiation into two subsets imprinted with different cytokine expression potentials and use both cell-contact-dependent and independent mechanisms for immunosuppression in periphery.