Human regulatory T cells (TR) cells have potential for the treatment of immune mediated diseases, such as graft versus host disease, but the anergic phenotype of these cells makes them difficult to expand in vitro. We have examined the requirements for growth and cytokine expression from highly purified human TR cells, and correlated these findings with the signal transduction events of these cells. We demonstrate that these cells do not proliferate or secrete IL-10 even in the presence of high doses of IL-2. Stimulation with a superagonistic anti-CD28 antibody (clone 9D4) and IL-2 partially reversed the proliferative defect, and this correlated with reversal of the defective calcium mobilization in these cells. Dendritic cells were effective at promoting TR cell proliferation, and under these conditions the proliferative capacity of TR cells was comparable to conventional CD4 lymphocytes. Blocking TGF-beta activity abrogated IL-10 expression from these cells, while addition of TGF-beta resulted in IL-10 production. These data demonstrate the ability of dendritic cells to provide proper costimulation to overcome the anergic phenotype of TR cells. In addition, these data demonstrate for the first time that TGF-beta is critical to enable TR cells to express IL-10.