Suppression by natural CD4(+)CD25(+) regulatory T cells (Tregs) is one mechanism by which tolerance is maintained. However, the way in which Tregs mediate suppression is not well understood. Here, we show that secreted phospholipase A2 (sPLA2)-IID is selectively produced by Tregs. sPLA2-IID is a potent mediator of Treg function, because it strongly suppressed proliferation of CD4(+) and CD8(+) T cells in vitro and in vivo in a manner independent of its catalytic activity. Furthermore, sPLA2-IID promoted the differentiation of Tregs, presumably via attenuating signaling through the PI3K/Akt/mammalian target of rapamycin pathway. Importantly, administration of a sPLA2-IID-Fc fusion protein inhibited disease development in murine models of colitis and multiple sclerosis, suggesting that sPLA2-IID's immunosuppressive function might be exploited therapeutically.