Naïve CD4 + T cells differentiate into diverse effector and regulatory lineages to orchestrate immunity and tolerance. The differentiation of pro-inflammatory T H1 and anti-inflammatory Foxp3+ regulatory T cells (Treg) was reciprocally regulated by S1P 1, a receptor for the bioactive lipid sphingosine-1-phosphate. S1P 1 inhibited extrathymic and natural Treg generation while driving T H1 cell development in a reciprocal manner and disrupted immune homeostasis. S1P 1 signaled through mTOR and antagonized TGF-β function mainly by attenuating sustained Smad3 activity. S1P 1 function was dependent upon endogenous sphingosine kinase activity. Remarkably, two seemingly unrelated immunosuppressants FTY720 and rapamycin targeted the same S1P 1 and mTOR pathway to regulate the dichotomy between T H1 and Treg cells. Our studies establish an S1P 1-mTOR axis that controls T cell lineage specification.