Regulatory T cells preserve tolerance to peripheral self-Ags and may control the response to allogeneic tissues to promote transplantation tolerance. Although prior studies have demonstrated prolonged allograft survival in the presence of regulatory T cells (T-reg), data documenting the capacity of these cells to promote tolerance in immunocompetent transplant models are lacking, and the mechanism of suppression in vivo remains unclear. We used a TCR transgenic model of allograft rejection to characterize the in vivo activity of CD4(+)CD25(+) T-reg. We demonstrate that graft Ag-specific T-reg effectively intercede in the rejection response of naive T cells to established skin allografts. Furthermore, CFSE labeling demonstrates impaired proliferation of naive graft Ag-specific T cells in the draining lymph node in the presence of T-reg. These results confirm the efficacy of T-reg in promoting graft survival and suggest that their suppressive action is accomplished in part through inhibition of proliferation.