Abstract The molecular mechanism of the extrathymic generation of adaptive, or inducible, CD4+Foxp3+ regulatory T cells (iTregs) remains incompletely defined. We show that exposure of splenic CD4+CD25+Foxp3− cells to IL-2, but not other common γ-chain cytokines, resulted in Stat5 phosphorylation and induced Foxp3 expression in ∼10% of the cells. Thus, IL-2/Stat5 signaling may be critical for Foxp3 induction in peripheral CD4+CD25+Foxp3− iTreg precursors. In this study, to further define the role of IL-2 in the formation of iTreg precursors as well as their subsequent Foxp3 expression, we designed a two-step iTreg differentiation model. During the initial “conditioning” step, CD4+CD25−Foxp3− naive T cells were activated by TCR stimulation. Inhibition of IL-2 signaling via Jak3–Stat5 was required during this step to generate CD4+CD25+Foxp3− cells containing iTreg precursors. During the subsequent Foxp3-induction step driven by cytokines, IL-2 was the most potent cytokine to induce Foxp3 expression in these iTreg precursors. This two-step method generated a large number of iTregs with relatively stable expression of Foxp3, which were able to prevent CD4+CD45RBhigh cell–mediated colitis in Rag1−/− mice. In consideration of this information, whereas initial inhibition of IL-2 signaling upon T cell priming generates iTreg precursors, subsequent activation of IL-2 signaling in these precursors induces the expression of Foxp3. These findings advance the understanding of iTreg differentiation and may facilitate the therapeutic use of iTregs in immune disorders.