Myeloid-derived suppressor cells (MDSCs) are well known regulators of regulatory T cells (Treg cells); however, the direct regulation of MDSCs by Treg cells has not been well characterized. We find that colitis caused by functional deficiency of Treg cells leads to altered expansion and reduced function of MDSCs. During differentiation of MDSCs in vitro from bone marrow cells, Treg cells enhanced MDSC function and controlled their differentiation through a mechanism involving transforming growth factor-β (TGF-β). TGF-β-deficient Treg cells were not able to regulate MDSC function in an experimentally induced model of colitis. Finally, we evaluated the therapeutic effect of TGF-β-mediated in-vitro-differentiated MDSCs on colitis. Adoptive transfer of MDSCs that differentiated with TGF-β led to better colitis prevention than the transfer of MDSCs that differentiated without TGF-β. Our results demonstrate an interaction between Treg cells and MDSCs that contributes to the regulation of MDSC proliferation and the acquisition of immunosuppressive functions.