CD4(+)Foxp3(+) regulatory T (Treg) cells originate primarily from thymic differentiation, but conversion of mature T lymphocytes to Foxp3 positivity can be elicited by several means, including in vitro activation in the presence of TGF-beta. Retinoic acid (RA) increases TGF-beta-induced expression of Foxp3, through unknown molecular mechanisms. We showed here that, rather than enhancing TGF-beta signaling directly in naive CD4(+) T cells, RA negatively regulated an accompanying population of CD4(+) T cells with a CD44(hi) memory and effector phenotype. These memory cells actively inhibited the TGF-beta-induced conversion of naive CD4(+) T cells through the synthesis of a set of cytokines (IL-4, IL-21, IFN-gamma) whose expression was coordinately curtailed by RA. This indirect effect was evident in vivo and required the expression of the RA receptor alpha. Thus, cytokine-producing CD44(hi) cells actively restrain TGF-beta-mediated Foxp3 expression in naive T cells, and this balance can be shifted or fine-tuned by RA.