Lactoferrin (LF) is known to possess anti-inflammatory activity, although its mechanisms of action are not well-understood. The present study asked whether LF affects the commitment of inducible regulatory T cells (Tregs). LF substantially promoted Foxp3 expression by mouse activated CD4 T cells, and this activity was further enhanced by TGF-β1. Interestingly, blocking TGF-β with anti-TGF-β Ab completely abolished LF-induced Foxp3 expression. However, no significant amount of soluble TGF-β was released by LF-stimulated T cells, suggesting that membrane TGF-β (mTGF-β) is associated. Subsequently, it was found that LF binds to TGF-β receptor III, which induces reactive oxygen species production and diminishes the expression of mTGF-β-bound latency-associated peptide, leading to the activation of mTGF-β. It was followed by phosphorylation of Smad3 and enhanced Foxp3 expression. These results suggest that LF induces Foxp3 Tregs through TGF-β receptor III/reactive oxygen species-mediated mTGF-β activation, triggering canonical Smad3-dependent signaling. Finally, we found that the suppressive activity of LF-induced Tregs is facilitated mainly by CD39/CD73-induced adenosine generation and that this suppressor activity alleviates inflammatory bowel disease.