Regulatory T cells (T(reg) cells) are required for peripheral tolerance. Evidence indicates that T(reg) cells can adopt specialized differentiation programs in the periphery that are controlled by transcription factors usually associated with helper T cell differentiation. Here we demonstrate that expression of the transcription factor Blimp-1 defined a population of T(reg) cells that localized mainly to mucosal sites and produced IL-10. Blimp-1 was required for IL-10 production by these cells and for their tissue homeostasis. We provide evidence that the transcription factor IRF4, but not the transcription factor T-bet, was essential for Blimp-1 expression and for the differentiation of all effector T(reg) cells. Thus, our study defines a differentiation pathway that leads to the acquisition of T(reg) cell effector functions and requires both IRF4 and Blimp-1.