CD4+ CD25+ regulatory T cells are crucial to the maintenance of tolerance in normal individuals. However, the factors regulating this cell population and its function are largely unknown. Estrogen has been shown to protect against the development of autoimmune disease, yet the mechanism is not known. We demonstrate that estrogen (17-β-estradiol, E2) is capable of augmenting FoxP3 expression in vitro and in vivo. Treatment of naive mice with E2 increased both CD25+ cell number and FoxP3 expression level. Further, the ability of E2 to protect against autoimmune disease (experimental autoimmune encephalomyelitis) correlated with its ability to up-regulate FoxP3, as both were reduced in estrogen receptor α-deficient animals. Finally, E2 treatment and pregnancy induced FoxP3 protein expression to a similar degree, suggesting that high estrogen levels during pregnancy may help to maintain fetal tolerance. In summary, our data suggest E2 promotes tolerance by expanding the regulatory T cell compartment.