Regulatory T (Treg) cells expressing the transcription factor forkhead box P3 (FoxP3) control immune responses and prevent autoimmunity. Treatment with glucocorticoids (GCs) has been shown to increase Treg cell frequency, but the mechanisms of their action on Treg cell induction are largely unknown. Here, we report that glucocorticoid-induced leucine zipper (GILZ), a protein induced by GCs, promotes Treg cell production. In mice, GILZ overexpression causes an increase in Treg cell number, whereas GILZ deficiency results in impaired generation of peripheral Treg cells (pTreg), associated with increased spontaneous and experimental intestinal inflammation. Mechanistically, we found that GILZ is required for GCs to cooperate with TGF-β in FoxP3 induction, while it enhances TGF-β signaling by binding to and promoting Smad2 phosphorylation and activation of FoxP3 expression. Thus, our results establish an essential GILZ-mediated link between the anti-inflammatory action of GCs and the regulation of TGF-β-dependent pTreg production. Copyright © 2014 The Authors. Published by Elsevier Inc. All rights reserved.