Adoptive transfer of thymus‐derived natural regulatory T cells (nTregs) effectively suppresses disease in murine models of autoimmunity and graft‐versus‐host disease (GVHD). TGFß induces Foxp3 expression and suppressive function in stimulated murine CD4+25‐ T cells, and these induced Treg (iTregs), like nTreg, suppress auto‐ and allo‐reactivity in vivo. However, while TGFß induces Foxp3 expression in stimulated human T cells, the expanded cells lack suppressor cell function. Here we show that Rapamycin (Rapa) enhances TGFß‐dependent Foxp3 expression and induces a potent suppressor function in naive (CD4+ 25–45RA+) T cells. Rapa/TGFß iTregs are anergic, express CD25 at levels higher than expanded nTregs and few cells secrete IL‐2, IFNγ or IL‐17 even after PMA and Ionomycin stimulation in vitro. Unlike other published methods of inducing Treg function, Rapa/TGFß induces suppressive function even in the presence of memory CD4+ T cells. A single apheresis unit of blood yields an average ∼240 × 109 (range ∼70–560 × 109) iTregs from CD4+25‐ T cells in ≤2 weeks of culture. Most importantly, Rapa/TGFß iTregs suppress disease in a xenogeneic model of GVHD. This study opens the door for iTreg cellular therapy for human diseases. This study demonstrates that potent suppressive function is induced when human CD4+25− T cells are expanded in the presence of rapamycin and TGFβ, and that adoptive transfer of these induced regulatory T cells ameliorates disease in a xenogeneic model of graft versus host disease.