Breakdown of tolerance is a hallmark of autoimmune diseases. Over the past 10 years, there has been increased interest in the role of FoxP3(+) regulatory T cells (T-Regs) in maintaining peripheral tolerance. Dysfunction of these cells is considered to play a major role in the development of autoimmune diseases. Besides their suppressive function, a fraction of these cells has the capacity to differentiate into IL-17-producing cells (Th-17), a phenomenon associated with autoimmune inflammation. The revealed plasticity of T-Regs, therefore, has obvious implications when designing therapeutic strategies for restoring tolerance in autoimmune diseases using T-Regs. In this review, we discuss development, classification, molecular characterization and mechanisms of suppression by T-Regs. In addition, we describe recent data on their potential conversion into Th-17 cells in human systemic autoimmune diseases. We also outline a new strategy for T-Reg-based therapy via isolation, expansion and re-infusion of highly pure FoxP3(+) T-Regs free of contaminating effector T cells.