CD4Foxp3 regulatory T cells (Tregs) are essential for homeostasis in the colon, but the mechanism by which local environmental cues determine the localization of colonic Tregs is unclear. Here, we administer indigo naturalis (IN), a nontoxic phytochemical aryl hydrocarbon receptor (AhR) agonist used for treating patients with ulcerative colitis (UC) in Asia, and we show that IN increases Helios Tregs and MHC class II epithelial cells (ECs) in the colon. Interactions between Tregs and MHC class II ECs occur mainly near the crypt bottom in the steady state, whereas Tregs dramatically increase and shift toward the crypt top following IN treatment. Moreover, the number of CD25 T cells is increased near the surface of ECs in IN-treated UC patients compared with that in patients treated with other therapies. We also highlight additional AhR-signaling mechanisms in intestinal ECs that determine the accumulation and localization of Helios Tregs in the colon.