In the presence of TGF-β, CD4+CD62L+T cells can be induced to CD4+CD25+FoxP3+ regulatory T cells (iTregs). In our previous work, we have shown that adoptive transfer of iTregs promoted liver recovery from ischemia reperfusion injury (IRI). In this study, we examined the molecular mechanism underlying the liver IRI attenuation by iTregs in a mouse partial hepatic IRI model. We found that the population of hepatic Tregs decreased significantly at 24 h after reperfusion. Adoptive transfer of iTregs before IRI markedly increased the numbers of hepatic Tregs and attenuated liver IRI as indicated by reduced serum aminotransferases and proinflammatory cytokines, such as interleukin-1 beta (IL-1β) and tumor necrosis factor alpha (TNF-α). Ex vivo study indicated that iTregs suppressed IL-1β and TNF-α expression, promoted transcription of interleukin-10 (IL-10), and elevated phosphorylation of SMAD3 in Kupffer cells (KCs). Furthermore, inhibition of TGF-β signaling by anti-TGF-β abolished the effects on KCs. Treatment with TGF-β suppressed matrix metalloprotease (MMP9) production in KCs and protected liver from IRI. In conclusion, our results suggest that iTregs play a critical role in hepatic IRI by regulating pro-inflammatory and anti-inflammatory function of KCs through TGF-β.